Persistent Systems saw its stock soar by 10% today. The jump came after strong earnings in Q2 of FY25. Their shares hit Rs 5,672 on the BSE during Wednesday’s trading. On the NSE too, the price touched Rs 5,674. The market’s response shows growing investor confidence in the company’s performance.
Impact of Result on Share Price
Moreover, the company posted impressive growth in its profits. Persistent Systems Ltd on Tuesday (October 22) reported a 23.4% year-on-year (YoY) increase in net profit at ₹325 crore for the second quarter that ended September 30, 2024. In the corresponding quarter of the previous fiscal, Persistent Systems posted a net profit of ₹263 crore, the company said in a regulatory filing. The IT firm’s revenue from operations surged 20.1% to ₹2,897 crore against ₹2,412 crore in the year-ago period. The company’s earnings before interest and taxes (EBIT) increased 5.8% quarter-on-quarter (QoQ) to ₹406.2 crore from ₹384 crore, according to the regulatory exchange filing by the company. The EBIT margin was flat at 14% in the September quarter versus the June quarter.
Result in Dollar terms and Order Book
In dollar terms, the company’s revenue reached $345.5 million against $328.2 million, reflecting a 5.3% growth QoQ. The constant currency revenue growth for Q2 stood at 5.1% over the first quarter. The order booking for the quarter that ended on September 30, 2024, was at $529 million in total contract value (TCV) and $348.3 million in annual contract value (ACV) terms.
Furthermore, early morning trading showed the stock at Rs 5,580. This was notably higher than the BSE Sensex, which only gained 0.25%. Previously, the stock had reached its yearly peak at Rs 5,692.95 on October 15. The steady rise in share prices reflects the company’s solid business strategy. Their consistent performance has attracted more investors. Besides, market analysts note this growth pattern matches their earlier predictions.
AI Development
The company has also made significant progress in artificial intelligence. First, they created two main focus areas in AI development. Then, they brought these advances to all their business areas. Additionally, they launched new platforms called SASVA and iAura. Their GenAI Hub has since gained popularity across different industries. The success of these platforms shows their innovation strength. More clients now use their AI solutions daily. The company’s investment in new technology has paid off well. Their focus on practical AI applications sets them apart. As a result, they’ve seen increased
demand for their services. Many businesses now prefer their AI solutions over competitors.
Brokerage Commentary
Several market experts have shared positive views about the company’s future. For instance, ICICI Securities expects better profit margins soon. Meanwhile, Motilal Oswal suggests buying the stock with a target of Rs 6,300. They predict strong revenue growth over the next three years. Despite high current prices, experts believe the stock has room to grow. The company’s unique position in product engineering supports these optimistic forecasts. Also, their diverse client base reduces business risks. Market watchers praise their management team’s vision. Their business model proves particularly successful in today’s market. Experts point to their strong cash flows as another positive sign. The company’s debt levels remain manageable and healthy.
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Management Commentary
Sandeep Kalra, Chief Executive Officer and Executive Director, of Persistent, said: “We are proud to announce the 18th sequential quarter of revenue growth, delivering $345.5 million in revenue, an 18.4% increase year-over-year. In the same period, our PAT grew by 23.4% in rupee terms.”
“This quarter, we continued to strengthen our capabilities and advance our AI-led, platform-driven services strategy. We brought on Starfish Associates to elevate our AI-powered contact center modernization; the addition of Arrka expands our comprehensive offerings in digital governance, including data privacy, AI governance, and cybersecurity,”
Conclusion
These factors combine to create a positive outlook for investors. Market experts recommend holding the stock long-term. Their financial health indicators remain strong and stable. The company shows good potential for future growth. Their business model proves sustainable and scalable. Regular dividend payments please long-term investors. The stock offers good value despite high prices. Their market position grows stronger each quarter. The company’s expansion plans look well-planned and achievable. Most analysts expect continued positive performance ahead.
Written By: Dipangshu Kundu
Disclaimer
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