PERSISTENT - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:16 pm

Fundamental Rating: 4.3

📊 Core Financials: Persistent Systems demonstrates strong fundamentals with ROE at 20.9% and ROCE at 28.4%, reflecting efficient capital usage. Debt-to-equity is very low at 0.05, ensuring financial stability. Quarterly PAT surged to 465 Cr. (+62.5% variation), highlighting strong earnings momentum. EPS of 93.8 ₹ supports valuation strength.

💹 Valuation Indicators: Current P/E of 68.8 is significantly higher than industry P/E of 26.4, suggesting premium valuation. P/B ratio ~15.0 (Price 6,365 / Book Value 423) is steep. PEG ratio at 3.53 indicates expensive growth-adjusted valuation. Intrinsic value appears lower than current price, making entry less attractive unless correction occurs.

🏢 Business Model & Competitive Advantage: Persistent Systems operates in IT services, digital engineering, and software solutions. Competitive advantage lies in strong client relationships, focus on digital transformation, and diversified global delivery. High growth visibility in cloud, AI, and product engineering strengthens long-term prospects.

📈 Entry Zone Recommendation: Current price (6,365 ₹) is above DMA 50 (6,060 ₹) and DMA 200 (5,659 ₹), showing technical strength. Entry zone: 5,800–6,200 ₹ for accumulation. Long-term holding is favorable given strong fundamentals, but valuation risks remain elevated.

Positive

• ✅ Strong ROE (20.9%) and ROCE (28.4%)
• ✅ Debt-to-equity very low (0.05)
• ✅ Quarterly PAT growth (+62.5%)
• ✅ DII holdings increased (+2.83%)

Limitation

• ⚠️ High P/E ratio (68.8 vs industry 26.4)
• ⚠️ Expensive PEG ratio (3.53)
• ⚠️ Premium P/B ratio (~15.0)
• ⚠️ FII holdings decreased (-2.95%)

Company Negative News

• 📉 FII holdings reduced (-2.95%)
• 📉 Valuation stretched compared to peers
• 📉 Risk of correction due to premium multiples

Company Positive News

• 📢 PAT improved from 374 Cr. to 465 Cr.
• 📢 DII holdings increased (+2.83%)
• 📢 Strong 52-week performance (+83.9%)

Industry

• 🌐 Industry P/E at 26.4, showing balanced sector valuations
• 🌐 IT services sector supported by digital transformation demand
• 🌐 Cloud, AI, and product engineering driving long-term growth

Conclusion

🔎 Persistent Systems demonstrates strong fundamentals with high return ratios, low debt, and robust earnings growth. However, valuations remain stretched relative to industry peers. Entry around 5,800–6,200 ₹ offers margin of safety, making it suitable for long-term holding if accumulated during corrections.

Would you like me to extend this into a peer benchmarking overlay comparing Persistent Systems with IT peers like Infosys, TCS, and Coforge to highlight sector rotation opportunities?