Persistent Systems Limited

Technology — Information Technology Services · NSE

₹5,741.00−₹99.00 (−1.70%)

DalalBaazaar Score

73 / 100

🟢 Good

Verdict

NEUTRAL

Risk

High

Driven by high debt relative to equity, a very high earnings multiple, which leaves little margin for disappointment, falling profits.

In simple words: Strong business and financial position, though profits are falling even as sales grow. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:49 pm

Understanding the Business

Company site ↗

The 60-second version of Persistent Systems Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Persistent Systems Limited provides software products, services, and technology solutions in India, North America, and internationally.

IndustryInformation Technology Services

SectorTechnology

Annual revenue₹14,748 Cr

How does it make money?

Turns over ₹14,748 Cr a year. Of every ₹100 of sales, about ₹13 reaches shareholders as profit, with ₹20 left at the operating level before interest, tax and depreciation.

Who are its competitors?

The closest listed comparisons in its industry are TATA CONSULTANCY SERV LT, INFOSYS LIMITED, HCL TECHNOLOGIES LTD, WIPRO LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?The numbers suggest a real one

ROCE has stayed above 15% in every year available and stands at 29.4%. Returns that high normally get competed away; when they persist, something is protecting them, and its ROE of 22.9% against a peer median of 32.0% is consistent with that. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

Peer median ROE32.0%

What is the outlook?

30 analysts covering the stock expect revenue to grow about 16.1% and earnings to grow about 26.7% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+16.1%

Est. earnings growth+26.7%

Analysts30

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +77% while net margin moved +15% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+77%

Margin effect+15%

DalalBaazaar Score

73/ 100

Good

Weighted across six categories. Every point is explained below.

✗ P/E of 50.2x is demanding — it needs sustained high growth to justify
✓ P/E is 24% below its own historical median of 66.1x — cheap by its own standards
✗ P/B of 10.48x is a steep premium to book

Quality vs. Valuation

Company Quality

81/ 100

Excellent

How good the business is, ignoring the share price entirely.

Valuation

42/ 100

Expensive

What you are being asked to pay, ignoring how good the business is.

A good business, but the price already reflects that. The quality is real; the question is whether you are overpaying for it today.

Historical Valuation

Current P/E

50.2x

3Y Median

66.1x

40 monthly readings · mean 64.4x · range 44.4x–90.9x

Sector Median

16.5x

median of 4 sector peers

🟢Current valuation is approximately 24% below its 3y median of 66.1x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

⚠️Against its sector it trades 203% above the peer median of 16.5x.

vs. its own history

Cheap

66.1x median over 40 months · -24%

vs. sector peers

Expensive

16.5x median of 4 peers · +203%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

30.6x

PEG

1.89

What's Good / What's Bad

🟢 What's Going Well4

Debt is being paid down
Total debt is down 27% over 3 years.
Cash generation is improving
Free cash flow is up 198% over 3 years.
High return on capital employed
ROCE of 29.4% is the mark of a business that converts capital into profit efficiently.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

1 item require attention · 1 high

🔴High leverageFinancial
Debt/Equity of 6.70x — earnings must service borrowings before shareholders see anything.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 29.4% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
Deleveraging frees up earnings
Debt is down 27% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Priced below its own history
The stock trades 24% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Leverage amplifies any setback
Debt/Equity of 6.70x. Interest is payable whether or not the business has a good year.
A premium to the sector to defend
It trades 203% above the peer median. That premium needs a reason that persists, or it closes.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 16% a year✓ 20.9% CAGR
Latest reported year was 30.3%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 18%✓ 19.8%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✓ ₹1,559 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.2x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 26%✓ 29.4%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

8 / 12 checks passed

✓ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✗ Profit growing year-over-year
✗ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

5 good · 2 neutral · 4 weak

Market Cap

₹90,063 Cr

Mid Cap

Mid-sized — more growth headroom, but sharper swings than large caps

P/E (Trailing)

50.2x

Expensive

Expensive — verify against sector peers

P/B Ratio

10.48x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹114.32

Profitable

Profitable on a per-share basis

ROE

22.9%

Strong

Strong capital efficiency

ROCE

29.4%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

6.70x

High

High leverage

Revenue Growth (YoY)

30.3%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-26.3%

Falling

Profits are shrinking

Dividend Yield

0.63%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹1,824 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

P/E (Forward)

32.5x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

ROA

12.8%

Good

Assets are working hard

Operating Margin

10.0%

Average

Average margins

Net Margin

10.7%

Good

Strong bottom-line conversion

Current Ratio

2.02

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.12

Defensive

Steadier than the market

52W Range Position

64%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

5515.3 / 5549.6

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

63.1

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹8,351 Cr	₹9,822 Cr	₹11,939 Cr	₹14,748 Cr	+20.9%
EBITDA	₹1,578 Cr	₹1,707 Cr	₹1,990 Cr	₹2,926 Cr	+22.8%
EBITDA Margin	18.9%	17.4%	16.7%	19.8%	—
PAT (Net Profit)	₹921 Cr	₹1,093 Cr	₹1,400 Cr	₹1,865 Cr	+26.5%
EPS	₹60.26	₹71.07	₹90.24	₹118.87	+25.4%
ROE	23.2%	22.1%	22.2%	23.8%	—
ROCE	27.6%	28.7%	28.6%	29.4%	—
Total Debt	₹658 Cr	₹451 Cr	₹311 Cr	₹477 Cr	-10.1%
Free Cash Flow	₹522 Cr	₹944 Cr	₹920 Cr	₹1,559 Cr	+44.0%

🟢 Revenue has grown at 20.9% a year over 3 years.

🟢 EBITDA has grown at 22.8% a year over 3 years.

🟡 EBITDA Margin has held roughly flat at 19.8% over 3 years.

🟢 PAT (Net Profit) has grown at 26.5% a year over 3 years.

🟢 EPS has grown at 25.4% a year over 3 years.

🟡 ROE has held roughly flat at 23.8% over 3 years.

🟢 ROCE has risen from 27.6% to 29.4% over 3 years (+1.7 pts).

🟢 Total Debt has shrunk at 10.1% a year over 3 years.

🟢 Free Cash Flow has grown at 44.0% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹11,377 Cr

Total Liabilities

₹3,539 Cr

Cash & Equivalents

₹1,075 Cr

Operating Cash Flow

₹1,767 Cr

Capex

-₹209 Cr

Shareholding (proxy)

Institutional Holding

44.1%

Insider Holding

33.1%

Corporate Actions

Next Earnings

15 Oct 2026

Dividend Rate

₹36

Ex-Dividend Date

27 Jul 2026

Analyst Consensus

Recommendations

20 Buy · 8 Hold · 8 Sell

Target Price (Mean)

₹5,744.83

+0.1% vs CMP

Target Range

₹3,718 – ₹6,772

Peer Comparison

Company	P/E	ROE
TATA CONSULTANCY SERV LT	17.3x	45.6%
INFOSYS LIMITED	15.8x	32.0%
HCL TECHNOLOGIES LTD	20.4x	24.6%
WIPRO LTD	14.5x	15.9%

Recent News

1 positive3 mixed2 negative

Persistent Systems Q2FY27: Net profit down 25% QoQ, revenue up 30%

scanx.trade, 18 OctResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Earnings Miss: Persistent Systems Limited Missed EPS By 37% And Analysts Are Revising Their Forecasts

Simply Wall Street, 18 OctAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Persistent Systems Q2: Net Profit Falls 27% Even As Revenue Sees A Rise

NDTV Profit, 15 OctResults

🔴Potentially negativeReported deterioration, which feeds the growth and margin inputs on this page directly.

Persistent Systems share price tumbles 5% after Q2 results 2026 | What should investors do? Check target price, rating

Livemint, 16 OctPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

Persistent Systems share price tumbles 5% after Q2 results 2026 | What should investors do? Check target price, rating

TradingView, 16 OctPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

Price Action: Persistent Systems shares down 4% as profit falls; Sri Lotus Developers hits 52-week high

Moneycontrol.com, 16 OctResults

🔴Potentially negativeReported deterioration, which feeds the growth and margin inputs on this page directly.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongBusiness Quality · Financial Health · Growth · Profitability

MiddlingRisk

WeakValuation

Points for each in the Score ↑

Good business, demanding price

The quality is real and the price already reflects it. Buying here is a bet that the business keeps compounding for long enough to grow into the multiple — which good businesses often do, but it removes the margin for error that a lower price would have given you. 1 high-severity red flag sits above this conclusion and should be read first.

All 5 tripwires holding · see Key things to watch ↑