PERSISTENT - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 4.0
| Stock Code | PERSISTENT | Market Cap | 99,049 Cr. | Current Price | 6,277 ₹ | High / Low | 6,599 ₹ |
| Stock P/E | 63.0 | Book Value | 420 ₹ | Dividend Yield | 0.56 % | ROCE | 28.4 % |
| ROE | 20.9 % | Face Value | 5.00 ₹ | DMA 50 | 6,204 ₹ | DMA 200 | 5,826 ₹ |
| Chg in FII Hold | 1.55 % | Chg in DII Hold | -0.80 % | PAT Qtr | 452 Cr. | PAT Prev Qtr | 459 Cr. |
| RSI | 51.9 | MACD | -45.2 | Volume | 3,67,228 | Avg Vol 1Wk | 3,95,713 |
| Low price | 4,149 ₹ | High price | 6,599 ₹ | PEG Ratio | 3.23 | Debt to equity | 0.05 |
| 52w Index | 86.8 % | Qtr Profit Var | 38.7 % | EPS | 96.4 ₹ | Industry PE | 25.1 |
📊 Analysis: Persistent Systems trades at ₹6,277 with a high P/E of 63.0 compared to the industry average of 25.1, indicating overvaluation. However, fundamentals are strong with ROE at 20.9% and ROCE at 28.4%, reflecting efficient capital use. EPS of ₹96.4 is solid, and a PEG ratio of 3.23 suggests expensive valuation relative to growth. Dividend yield of 0.56% provides modest income support. Debt-to-equity is very low at 0.05, showing financial stability. Quarterly PAT is stable (₹452 Cr. vs ₹459 Cr.), though slightly lower. Technicals are neutral (RSI 51.9, MACD negative, trading above DMA 50 & 200). Overall, Persistent is a strong long-term candidate but currently overvalued, making dips more attractive for entry.
💡 Entry Price Zone: Ideal accumulation range is ₹5,600–₹5,900, closer to the 200 DMA (₹5,826) and below current levels. Current price is slightly stretched, so dips offer better risk-reward.
📈 Exit / Holding Strategy: For existing holders, Persistent is a strong long-term compounder. Recommended holding period: 5+ years to benefit from consistent growth in IT services and digital transformation. Exit strategy: partial profit booking near ₹6,500–₹6,600 if valuations stretch, while retaining core holdings for compounding.
Positive
- Strong ROE (20.9%) and ROCE (28.4%) show efficient capital utilization.
- Debt-to-equity ratio of 0.05 indicates financial stability.
- EPS of ₹96.4 supports earnings strength.
- FII holdings increased (+1.55%), showing foreign investor confidence.
- Quarterly profit variation (+38.7%) indicates growth momentum.
Limitation
- High P/E (63.0) compared to industry average (25.1), indicating overvaluation.
- PEG ratio of 3.23 suggests expensive valuation relative to growth.
- Dividend yield is modest at 0.56%, limiting income returns.
- MACD negative (-45.2), showing short-term bearishness.
Company Negative News
- Quarterly PAT declined slightly from ₹459 Cr. to ₹452 Cr.
- DII holdings reduced (-0.80%), showing lower domestic institutional confidence.
Company Positive News
- FII holdings increased (+1.55%), reflecting foreign investor confidence.
- Quarterly profit variation (+38.7%) shows strong growth momentum.
Industry
- Industry PE at 25.1, much lower than Persistent’s valuation, suggesting peers may offer better value.
- IT services and digital transformation industry has strong long-term demand potential globally.
Conclusion
✅ Persistent Systems is a fundamentally strong, debt-free company with efficient capital metrics and consistent growth. Ideal entry is ₹5,600–₹5,900. Long-term investors can hold for 5+ years to benefit from compounding. Existing holders may book profits near ₹6,500–₹6,600 while retaining core positions for sustained growth.