1:2 Split, Rs 42/Sh Dividend In 2024: BUY LargeCap IT Persistent For Rs 6,170 Target; Stock Hits New High

Large-cap IT giant, Persistent Systems witnessed sharp buying on Wednesday, October 23, 2024, after the company announced its Q2 results for FY25. In a single day, Persistent shares skyrocketed nearly 12% and touched a new 52-week high. Brokerage JM Financial has suggested BUY for a target price of Rs 6,170 apiece.

Persistent Systems Share Price:

In the trading hours of Wednesday, Persistent Systems jumped by nearly 12% to hit a new 52-week high of Rs 5,766.30 apiece. On BSE, the stock closed at Rs 5717.70 apiece, up by Rs 561.30 or 10.9% with market value at Rs 89,110.35 crore.

YTD, the stock zoomed by over 56% on BSE so far.

In 2024, so far, Persistent Systems has carried one stock split and two dividend payouts.

Stock Split: The stock turned ex-split for a 1:2 ratio on April 1, 2024, where the face value of Rs 10 each was split to Rs 5 each.

Dividends: Persistent delivered an interim dividend of Rs 32 per share for which it turned ex-date on January 30, 2024, while its final dividend payout was Rs 10 per share and the ex-date was at Rs 10 per share. Together, in 2024 so far, the company paid up to Rs 42 dividend per share.

Persistent Systems Stock Recommendation:

Broker JM Financial said that " It is difficult to find chinks in PSYS' growth story. PSYS has protected its book of business - reflected in steady renewals. It won fair share of clients' wallets - reflected in healthy net new deal wins. And it has done these across clients - reflected in the consistent movement of clients up the revenue buckets."

The brokerage's note further said, "Improving outlook in Hi-tech, led by its AI-led platform offerings (SASVA 2.0 etc.), will further balance its growth. Importantly, even margin fluctuations appear to be behind now. PSYS negated multiple margin headwinds in 2Q, largely through operational efficiencies. This should address investor concerns of one-offs driven margin improvement not sustaining."

On the valuation, JM Financial's note said, " We raise our FY25-27E USD revenues by 1-2% on 2Q beat. Given our recent earnings upgrade, revision to margin assumptions is limited. ESOP-led share dilution further limits changes to our FY25-27E EPS. Consistency of PSYS growth is remarkable. It has as much to do with execution as it is with its differentiated capabilities. These lend long-term earning visibility, justifying premium valuation. BUY."

The target price is raised to Rs 6,170 from earlier target of Rs 6,080.

In Q2FY25, the company reported 23.4% YoY and 6.1% QoQ growth net profit to Rs 325 crore. While revenue jumped by 20.1% YoY and 5.8% QoQ to Rs 2,897.15 crore. In USD terms, revenue climbed by 18.4% YoY and 5.3% QoQ to $345.5 million. The order booking for the quarter ended on September 30, 2024, was at $529.0 million in Total Contract Value (TCV) and at $348.3 million in Annual Contract Value (ACV) terms.

Persistent Systems is a global services and solutions company delivering Digital Engineering and Enterprise Modernization to businesses across industries. With over 23,200 employees located in 19 countries, the Company is committed to innovation and client success.