Persistent Systems has been rated a ‘Buy’ by Mirae Asset Sharekhan in its June 18, 2025, research note, citing the company’s strong FY25 performance, robust deal pipeline, and favorable macro indicators within the digital engineering space. The brokerage has assigned a 12-month target price of Rs 4,050, suggesting a decent upside from current levels. Backed by strategic growth levers such as GenAI adoption, market share gains, and potential margin improvements, the stock is poised for re-rating. However, investors must monitor near-term challenges like macro headwinds and tech budget shifts.

Robust FY25 Earnings Prompt Positive Rating

Strong Earnings Performance: Mirae Asset Sharekhan's report highlights Persistent Systems' FY25 net profit of Rs 997 crore and revenue of Rs 7,551 crore, with a 15.1% YoY revenue growth and consistent margin delivery at 14.8%. Despite a volatile global environment, the company’s financial delivery remained resilient.

Q4FY25 Snapshot: For the quarter ending March 2025, revenue stood at Rs 1,957 crore (up 13.1% YoY), while net profit came in at Rs 270 crore. Deal wins and steady client additions have contributed to the quarter’s outperformance.

Digital Engineering Tailwinds Offer Multi-Year Growth

GenAI Integration Accelerating Transformation: Persistent’s aggressive pivot toward generative AI (GenAI) solutions is expected to drive higher ticket-size engagements. The company has seen early success in co-developing platforms using AI-driven tools across healthcare, BFSI, and retail.

Cloud and Data Engineering Momentum: With over 40% of its business tied to data, cloud, and platform engineering, Persistent is well-positioned to benefit from enterprise cloud adoption and hybrid multi-cloud migrations.

Strategic Deal Wins and Client Metrics Strengthen Outlook

Strong Deal Pipeline: TCV (Total Contract Value) for FY25 was approximately $1.7 billion, with $372 million in Q4 alone. The company added five new clients in the $10M+ revenue category and strengthened presence across North America and Europe.

Geographic and Vertical Expansion: BFSI remained the largest vertical (31.2% of revenue), followed by healthcare and technology services. North America contributed over 77% of revenue, while APAC showed the fastest growth on a sequential basis.

Margins Steady Amid Volatility; Scope for Improvement

EBITDA Margin Trends: EBITDA margin for FY25 held steady at 14.8%, though slightly below historical highs. The report notes that while short-term pressure from wage hikes and GenAI investments remains, operational efficiency and pyramid restructuring should aid recovery.

Outlook on Cost Optimization: Management is expected to guide margin expansion of 30–50 bps over the next two quarters, backed by better offshore leverage, pricing tailwinds, and improved utilization rates.

Valuation, Ratings, and Key Catalysts

Target Price and Valuation: Sharekhan values Persistent at Rs 4,050, implying a forward PE of ~40x FY26E EPS. The valuation reflects expectations of double-digit revenue CAGR, margin tailwinds, and strategic tech transformation.

Upside Catalysts: Key growth triggers include:

Large-scale AI project deployments across industries

Cross-sell synergies post-acquisitions

Enhanced wallet share from top clients

Easing macro pressure and improving discretionary tech spending

Investment Risks to Monitor

Short-Term Demand Concerns: Persistent remains exposed to tech spending moderation, especially in BFSI and manufacturing verticals in the U.S.

Execution Risks in GenAI Projects: While GenAI offers transformative potential, early-stage integration may face implementation hurdles and inconsistent monetization.

Attrition and Talent Supply: Although attrition has moderated to below 16%, competition for high-end AI talent could impact margins and delivery timelines.

Stock Technical Levels and Investor Guidance

Current Price & Support Zones: Persistent Systems trades around Rs 3,720 (as of June 18, 2025). Technically, key support lies at Rs 3,600, while resistance is expected near Rs 3,900–4,050.

Investor Strategy:

Short-term: Accumulate on dips near Rs 3,600 with a stop loss at Rs 3,480.

Medium-term: Target Rs 4,050 over the next 6–9 months.

Long-term: A re-rating to higher PE multiples is possible if earnings sustain post FY26, especially with GenAI monetization scaling up.

Bottomline for Investors: Balanced Play on Digital Transformation

Persistent Systems stands as one of the most credible mid-tier IT plays with a strategic focus on digital engineering and cloud solutions. Backed by consistent execution, sector leadership in next-gen technologies, and a healthy pipeline, the company continues to draw institutional interest. Mirae Asset Sharekhan’s 'Buy' stance rests on a compelling combination of revenue growth, stable margins, and emerging tailwinds from AI-led enterprise transformation.

Yet, investors must keep an eye on global economic sentiment, tech budget trends, and talent cost escalations. For those looking at a balanced risk-reward proposition in the IT services space, Persistent remains a resilient bet with long-term wealth compounding potential.