IT Stock: 22% rally or 20% fall? Brokerages split on this midcap after Q4 results

Midcap IT services company Persistent Systems reported a 33.73 per cent year-on-year rise in consolidated net profit to Rs 529.26 crore for the January-March quarter of FY26, driven by steady revenue growth and operational performance.

The company had posted a net profit of Rs 395.76 crore in the corresponding quarter last year, according to regulatory filings.

Persistent Systems Q4 Results

Revenue from operations grew around 25 per cent to Rs 4,055.93 crore in Q4 FY26, compared with Rs 3,242.11 crore in the year-ago period. The company also reported a statutory impact of Rs 89 crore due to the implementation of new labour codes.

On a sequential basis, net profit rose 20.43 per cent while revenue increased 7.35 per cent over the October-December quarter.

For the full financial year 2025-26, Persistent Systems reported a 33.20 per cent increase in profit to Rs 1,865.12 crore, up from Rs 1,400.16 crore in FY25. Revenue from operations rose 23.53 per cent to Rs 14,748.44 crore.

Order booking for the March quarter stood at USD 600.8 million in total contract value (TCV), indicating continued deal momentum.

Persistent Systems Final Dividend

The company’s board recommended a final dividend of Rs 18 per share with a face value of Rs 5, translating to 360 per cent. The total dividend for FY26 stood at Rs 40 per share, compared with Rs 35 per share in the previous fiscal.

As of March 31, 2026, the company had over 27,500 employees globally, including 23,869 employees in India.

Brokerage views and target prices

Brokerages remained divided on the stock, with most maintaining positive or neutral ratings but adjusting target prices following the results. The stock was trading at a current market price (CMP) of Rs 5,329.

JPMorgan maintained an “Overweight” rating on Persistent Systems and cut its target price to Rs 5,900 from Rs 6,000. This implies an upside of about 10.7 per cent from the current level.

HSBC retained a “Hold” rating and raised the target price to Rs 5,755 from Rs 5,675, indicating a potential upside of around 8 per cent.

CLSA maintained a “Buy” rating but reduced the target to Rs 6,520 from Rs 7,101. The revised target suggests an upside of nearly 22.4 per cent.

Nomura maintained a “Neutral” rating and cut the target price to Rs 5,200 from Rs 5,300. This implies a downside of about 2.4 per cent from the CMP.

UBS retained a “Buy” rating with a slightly lower target of Rs 6,240 from Rs 6,280, indicating an upside of around 17.1 per cent.

Domestic brokerage Motilal Oswal Financial Services reiterated a “Buy” rating with a target price of Rs 6,200, implying an upside of about 16.3 per cent.

Citi Bearish on Persistent Systems

Citi maintained a “Sell” rating with a target price of Rs 4,230, suggesting a downside of nearly 20.6 per cent.

The brokerage said valuations remain at a significant premium to peers and flagged concerns over high competitive intensity and the impact of artificial intelligence on the sector.

Management commentary and outlook

According to management commentary cited by brokerages, the company remains confident of gaining market share despite macro uncertainties, including geopolitical developments and tariff-related concerns.

However, analysts noted that revenue growth has begun to moderate, marking the fifth consecutive quarter of deceleration in core growth, excluding software licenses. Growth in top clients has also moderated, although the company indicated no structural issues and said wallet share remains intact.

Margins are expected to remain in the 16-17 per cent range in the near term, with continued investments in artificial intelligence platforms, consulting capabilities, and overall business expansion likely to cap any sharp margin improvement.

Brokerages said Persistent Systems remains among the faster-growing mid-tier IT companies, but growth expectations have been slightly moderated due to softer deal momentum and ongoing reinvestments.