IT services firm Persistent Systems Q1 FY26 results showcased a robust set of numbers for the first quarter of FY26, with profit after tax (PAT) rising 38.7% year-on-year to ₹424.9 crore, and revenue growing 21.8% YoY to ₹3,333.6 crore. The company also recorded a Total Contract Value (TCV) of $520.8 million and an Annual Contract Value (ACV) of $385.3 million—reflecting strong client traction and sustained momentum.
Yet, despite this operational strength in Persistent Systems Q1 FY26, Persistent stock tumbled more than 9% intraday on July 24, hitting a low of ₹5,084 before settling at ₹5,143. The sharp decline starkly contrasted the Sensex’s modest 0.26% dip that day. Analysts cited a mild revenue miss, margin pressure, and cautious outlook in certain verticals like healthcare as factors behind the sell-off.
Brokerage Opinions Split: Growth Confidence vs. Short-Term Headwinds
Brokerages offered mixed reactions following the Persistent Systems Q1 FY26 earnings announcement. Antique Broking downgraded its 12-month target from ₹5,575 to ₹5,350 while retaining a Hold rating, pointing to muted performance in the healthcare segment and rising operational costs.
On the other hand, Nuvama Institutional Equities retained a Buy rating, hiking its target to ₹6,600. The firm cited Persistent’s strong deal pipeline and confidence in achieving its $2 billion revenue goal by FY27 as key positives. Motilal Oswal also reiterated a Buy call, adjusting its target to ₹6,800 based on accelerating growth in BFSI and hi-tech sectors—particularly around AI and digital transformation services.
Meanwhile, Nomura struck a neutral tone, noting that the company’s constant-currency revenue growth and EBIT margins in Persistent Systems Q1 FY26 were below expectations, indicating that short-term performance may remain volatile.
Future Outlook: AI-Led Strategy Anchors Long-Term Growth
Despite market jitters, Persistent Systems Q1 FY26 reinforces the company’s bullish on its long-term trajectory. CEO Sandeep Kalra emphasized that Q1 FY26 marked the 21st consecutive quarter of revenue growth, driven by a clear shift toward an AI-led, platform-driven service model. The company has earned industry recognition from ISG and Everest Group, adding weight to its execution capability.
Persistent’s management reaffirmed its commitment to hitting $2 billion in annual revenue by FY27, which would require sustaining a CAGR of around 19% over the next two years. However, vertical-specific concerns—particularly in healthcare—and pressure on margins continue to challenge investor confidence in the near term.
Overall, Persistent appears well-positioned for the long haul with strategic bets in AI, cloud, and enterprise modernization. Still, for investors, the choice remains a balance between faith in long-term fundamentals and navigating short-term valuation volatility.
Persistent Systems has delivered solid numbers and shown consistent growth, but the mixed market response reveals investor caution amid margin and sectoral concerns. While brokerages remain divided, the long-term story—backed by strong deal wins and strategic direction—remains compelling for forward-looking investors.
