Persistent Systems share price tumbles 5% after Q3 results; what should investors do?

Persistent Systems share price fell nearly 5 per cent in morning trade on the BSE on Wednesday, January 21, a day after the company announced its December quarter (Q3FY26) results. The stock opened at Rs 6,335 against its previous close of Rs 6,343.20 and slipped to an intraday low of Rs 6,027. On Tuesday, Persistent Systems shares had declined 1.4 per cent.

Q3 results: revenue strong, profit dips sequentially

After market hours on January 20, Persistent Systems reported a 17.3 per cent year-on-year and 4 per cent quarter-on-quarter rise in consolidated revenue to $422.5 million in Q3FY26. In constant currency terms, revenue grew 17.3 per cent year-on-year and 4.1 per cent quarter-on-quarter.

Add Zee Business as a Preferred Source

Net profit rose 17.8 per cent on a year-on-year basis but declined 6.8 per cent sequentially to Rs 439.45 crore. The company said the quarter was impacted by a one-time hit related to the implementation of new labour codes.

Interim dividend announced

The board declared an interim dividend of Rs 22 per share with a face value of Rs 5 each for FY26. The record date has been fixed as Tuesday, January 27, 2026. The dividend will be paid within 30 days of declaration.

Brokerage view: targets raised, but valuation a concern

CLSA maintained a Buy rating and raised its target price to Rs 8,865 from Rs 8,731. It said Persistent delivered another strong quarter with broad-based revenue growth, healthy order bookings and improved profitability. CLSA added that the company’s long-term revenue targets of $2 billion by FY27 and $5 billion by FY31 remain intact. It raised FY27 and FY28 EPS estimates by 3 per cent and 2 per cent, respectively.

UBS also maintained a Buy rating and increased its target price to Rs 7,490 from Rs 7,245.

JP Morgan retained an Overweight rating and raised its target to Rs 8,000 from Rs 7,400.

HSBC maintained a Hold rating and lifted its target price to Rs 6,560 from Rs 6,400. It said growth and margins were supported by licence sales of AI platforms and tools. However, HSBC cautioned that expectations appear largely priced into the stock valuation.

Nomura kept a Neutral rating and raised its target to Rs 6,100 from Rs 6,000. While deal wins and margins remained healthy, Nomura noted that the stock is trading at about 41.5 times FY27 estimated earnings. It said it prefers Coforge within the mid-cap IT space.

Long-term performance remains strong

Persistent Systems shares have delivered multibagger returns of over 180 per cent in the last three years, as per BSE data. Over the past one year, the stock gained around 4 per cent.

In the last three months, the stock advanced 5 per cent. The stock touched a 52-week high of Rs 6,597 and a 52-week low of Rs 4,163.80.

What should investors do?

Analysts remain positive on Persistent Systems’ growth outlook, driven by strong deal wins and rising demand for AI-led platforms. However, the near-term correction reflects concerns around valuation and profit volatility. Long-term investors may consider holding the stock, while fresh entry could be more attractive on deeper corrections, given the premium valuation.