Earnings Outlook
Robust banking, tech ops to drive Persistent Systems sales
This story was originally published at 10:11 IST on 23 July 2025
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By Arya S. Biju
MUMBAI – Continued traction in banking, financial services and insurance, and hi-tech verticals, along with a ramp-up of deals is expected to drive Persistent Systems Ltd.'s top line for the June quarter. However, this growth is expected to be partially offset by softness in the healthcare vertical. Analysts are divided on how the company will fare in terms of margin - some expect it to grow sequentially, others estimate it to be flat, and a few expect it to fall.
The company is also expected to benefit from its low exposure to the manufacturing business, as analysts expect information technology companies with high exposure to manufacturing and retail segments to have been affected more by the uncertainties over US tariffs and deferred client spending.
The technology services company's consolidated net profit for the latest quarter is expected to rise over 6% on quarter and nearly 37% on year to INR 4.20 billion, according to the average of estimates from 16 brokerages. The company's consolidated net sales are expected to rise over 3% on quarter and over 22% on year to INR 33.55 billion. This will mark the 25th consecutive quarter of sequential growth in the company's top line and fourth consecutive quarter of sequential growth in the bottom line. However, the estimated low-single digit sequential rise in the company's top line for the June quarter is expected to be the slowest in eight quarters.
JM Financial Institutional Securities Pvt. Ltd. has the highest estimate of INR 4.36 billion for the company's net profit. On the other hand, Dolat Capital Market Pvt. Ltd. has the lowest estimate for the company's net profit at INR 3.85 billion, which indicates a sequential decline of around 3%. It expects the company's earnings to be impacted by higher investments and wage hikes. Nirmal Bang Equities Pvt. Ltd. has the highest estimate for the company's net sales at INR 34.08 billion, supported by deal ramp-ups. The lowest estimate for net sales was by ICICI Securities Ltd. at INR 33.33 billion.
In dollar terms, the company is expected to report a revenue of $391.6 million in Apr-Jun, up from $375.2 million in the previous quarter and $328.2 million in the year-ago quarter. In constant currency terms, the company's revenue for the quarter is expected to rise 3.0-4.2% sequentially, estimates from 12 brokerages showed.
Revenue from the banking, financial services and insurance segment is expected to rise a little over 6% sequentially during the latest quarter, Anand Rathi Share and Stock Brokers Ltd. said in an earnings preview. During the March quarter, revenue from this segment had contributed over 32% to the company's total sales, rising nearly 27% on year to $121 million.
However, analysts flag softness in the company's healthcare and life sciences vertical owing to challenges faced by top clients in this segment. Indsec Securities expects the company's healthcare and life sciences segment to be "soft on account of US federal policies." During the March quarter, revenue from the segment had risen nearly 34% on year to $100.7 million.
Analysts remain divided on the company's earnings before interest and tax margin performance for the June quarter. Brokerages Elara Securities, Kotak Institutional Equities, Motilal Oswal, and Mirae Asset Sharekhan expect the company's EBIT margin to improve 20-40 basis points sequentially. Motilal expects steady rationalisation of selling, general, and administrative expenses and employee expenses to support the company's margin for the quarter.
In contrast, Emkay Global and HSBC Global Research expect the company's margin to decline 20-30 bps sequentially owing to visa costs and the absence of earn-out reversals. However, ICICI Securities, Indsec Securities, Nirmal Bang Equities, Nuvama Wealth Management, and Prabhudas Lilladher expect the company's EBIT margin to remain flat on quarter. Indsec Securities expects the growth in sales and operating leverage to offset expenses on account of the employee benefit plan and the absence of earnout reversals.
The company is expected to report a healthy order book for the June quarter, led by banking, financial services and insurance, and hi-tech verticals. However, the pace of deal closures is expected to remain slow, analysts said.
The company will announce its earnings Wednesday. Analysts will watch out for management commentary on the impact of increased macroeconomic and geopolitical uncertainties on technology spending and the pace of decision-making among clients.
The revenue and margin outlook for 2025-26 (Apr-Mar), demand trends across verticals, hiring plan and attrition trends will also be monitored. Further, updates on the deal pipeline and timelines for deal conversions will also be monitored.
Management commentary on efforts taken to reach its $2-billion revenue target by FY27 and $5 billion revenue by FY31 will be watched. Investors will also look for management commentary on the impact of generative artificial intelligence automation on volume of work and pricing.
At 1000 IST, shares of Persistent Systems traded 0.9% lower at INR 5,662 on the National Stock Exchange. The stock has risen nearly 10% since the announcement of its March quarter earnings on Apr. 24, but is down nearly 17% from its all-time high of INR 6,788.9 hit on Dec. 20.
Of the 18 brokerage reports available on the stock with Informist, eight have a 'buy' or equivalent rating on the stock, with an average target price of INR 6,406 per share. Of the remaining 10, six have a 'hold' or equivalent rating on the stock and four have a 'sell' or equivalent rating.
Following are the June quarter earnings estimates for Persistent Systems based on reports from 16 brokerages in descending order of estimate of net profit:
| Brokerage | Net Sales (in INR mln) | Net Profit (in INR mln) | EBITDA (in INR mln) | Revenue (mln $) | % EBIT margin |
|---|---|---|---|---|---|
| JM Financial Institutional Securities Pvt. Ltd. | 33,452.00 | 4,364.00 | 6,208.00 | -- | -- |
| Sharekhan Ltd. | 33,590.00 | 4,340.00 | -- | -- | -- |
| Antique Stock Broking Ltd. | 33,648.00 | 4,322.00 | 6,259.00 | -- | -- |
| Kotak Institutional Equities | 33,662.00 | 4,295.00 | 6,136.00 | 393 | 15.9 |
| Motilal Oswal Financial Services Ltd. | 33,546.00 | 4,288.00 | 6,139.00 | -- | -- |
| Anand Rathi Share and Stock Brokers Ltd. | 33,405.00 | 4,281.00 | 6,060.00 | -- | 15.8 |
| Elara Securities (India) Pvt. Ltd. | 33,397.00 | 4,238.00 | -- | 388 | -- |
| HDFC Securities Ltd. | 33,520.00 | 4,230.00 | -- | 392 | 15.7 |
| Indsec Securities and Finance Ltd. | 33,600.00 | 4,200.00 | -- | 400 | 15.6 |
| Prabhudas Lilladher Pvt Ltd. | 33,400.00 | 4,200.00 | -- | 390.6 | 15.7 |
| Emkay Global Financial Services Ltd. | 33,723.00 | 4,161.00 | 6,060.00 | -- | -- |
| Nuvama Wealth Management Ltd. | 33,466.00 | 4,142.00 | 6,057.00 | 391 | 15.5 |
| ICICI Securities Ltd. | 33,332.00 | 4,135.00 | -- | 390 | 15.6 |
| Nirmal Bang Equities Pvt. Ltd. | 34,075.00 | 4,088.00 | -- | 390 | 15.6 |
| HSBC Global Research | 33,386.00 | 4,013.00 | -- | 390 | 15.3 |
| Dolat Capital Market Pvt. Ltd. | 33,597.00 | 3,853.00 | -- | -- | -- |
| Average | 33,549.94 | 4,196.88 | 6,131.29 | 391.62 | -- |
End
US$1 = INR 86.36
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Tanima Banerjee
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