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Informist, Monday, Jan. 19, 2026

By Arya S. Biju

MUMBAI – Seasonal furloughs and the impact of wage hikes are expected to weigh on mid-cap information technology major Persistent Systems Ltd.'s bottom line for the December quarter. The company is expected to report a low-single-digit sequential decline in its bottom line for the December quarter, after five straight quarters of growth. However, its top line for the quarter is expected to rise by low single digits sequentially, driven by growth in its hi-tech and banking, financial services, and insurance verticals.

The technology services company is expected to report a near 5% sequential decline in its consolidated net profit for the December quarter to INR 4.50 billion, according to the average of estimates from 16 brokerages. On a year-on-year basis, the company's net profit is seen rising around 21%, but this would be the slowest on-year rise in net profit in eight quarters. 

The company's consolidated net sales for the quarter are expected to grow over 4% on quarter and 22% on year to INR 37.36 billion, according to the average of estimates. This will mark the 27th consecutive quarter of sequential growth and the 26th straight quarter of on-year growth in the company's top line. 

The highest estimate for both bottom line and top line of the company at INR 4.93 billion and INR 37.70 billion, respectively, is from JM Financial Institutional Securities Pvt. Ltd. The lowest estimate of INR 4.20 billion for the company's bottom line is from Dolat Capital Market Pvt. Ltd. and the lowest estimate of INR 36.98 billion for the top line is from DRChoksey FinServ Pvt. Ltd.

In constant currency terms, the company's revenue is expected to grow 2.0-4.2% sequentially, according to estimates from 11 brokerages. Most analysts expect revenue from the company's banking, financial services, and insurance segment to grow in the reporting quarter, driven by the ramp-up of large deals. On the other hand, brokerage Prabhudas Lilladher Pvt. Ltd. expects the segment to be weak in the reporting quarter due to the impact of furloughs. 

Similarly, while some analysts expect the company's healthcare and life sciences vertical to largely deliver steady performance on a quarter-on-quarter basis, Indsec Securities and Finance Ltd. expects a turnaround in the segment in the reporting quarter as the vertical stabilises.

The company's operating margin for the reporting quarter is widely expected to decline sequentially due to wage hikes undertaken in the quarter and seasonal furloughs. Meanwhile, benefits from the depreciation of the rupee against the dollar and operational efficiencies are expected to limit the decline, according to brokerages. The company's earnings before interest and tax margin is expected to be 14.7-15.6%, estimates from 12 brokerages showed. In the September quarter, the company's EBIT margin expanded 80 basis points on quarter to 16.3%. 

The company's total deal contract value for the December quarter is expected to stay above the $500 million mark, in line with the past five quarters, as it continues to capitalise on strong partnerships and outcome-based engagements, brokerage Nirmal Bang Equities Pvt. Ltd. said in a note. ICICI Securities expects the company's total deal contract value to be around $600 million, led by deal wins in hi-tech and banking, financial services, and insurance verticals. In the September quarter, the company had reported a total contract value of $609.2 million and an annual contract value of $447.9 million. 

The company will announce its December quarter earnings Tuesday. Market participants will watch out for management commentary on technology budgets by US-based clients and an update on demand across verticals. Comments on the company's H-1B visa dependency and the steps planned to mitigate the potential impact of the fee increase and the change in the H-1B visa allocation process will be tracked by the Street, Emkay Global said. Management commentary on hiring plans and attrition trends will also be monitored.

Updates on the likely impact of the new labour codes on the company's margins will also be tracked by the Street, according to brokerages. Most of the company's peers have reported increases in employee benefits provisions, prompted by the new law. Under the new codes, which came into effect on Nov. 21, basic pay must account for at least 50% of an employee's total cost to the company. As a result, payouts tied to statutory contributions such as gratuity and leave-related benefits are set to increase for companies.

Monday, shares of the company closed 0.6% higher at INR 6,438 on the National Stock Exchange. The stock has risen almost 21% since the company detailed its September-quarter earnings on Oct. 14. However, it is still over 5% below the record high of INR 6,788.90 reached on Dec. 20, 2024.

Of the 13 research reports on the company available with Informist, eight have a 'buy' or equivalent recommendation on the stock with an average target price of INR 6,600, which is 2.5% higher than the stock's closing price Monday. Of the remaining five, four have a 'hold' or equivalent recommendation with an average target price of INR 5,436, around 16% lower than the closing price Monday, and one has a 'sell' call on the stock.

The following are the December quarter earnings estimates for Persistent Systems from 16 brokerage firms in descending order of the estimate of net profit in INR million:
 

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US$1 = INR 90.91

Edited by Saji George Titus

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