Order book growth keeps Persistent Systems on track

The stock of Persistent Systems has gained 8% in the past three weeks, reducing the fall since its fourth quarter results day on April 21 to 6%. The upswing owes to the improving investor sentiment towards the technology sector amid weaker rupee which supports realisations and AI related initiatives by Indian tech vendors. Persistent reported sustained momentum in the order book at the end of the March quarter while retaining its long-term growth projections. Though analysts have retained a buy rating on the stock, some of them have moderated earnings estimates by 3-5% for the next two years citing a possible deceleration in revenue as clients adopt artificial intelligence (AI) driven solutions.

The company expects to touch quarterly revenue level of $500 million by the end of March 2027 quarter, implying an annualised revenue of $2 billion. It clocked a revenue of $436 million in the March 2026 quarter and $1,654 million in FY26. To meet the guidance, the company requires to report an average 3.5% quarterly revenue growth. Also, revenue for the fourth quarter of the current fiscal year needs to grow by around 15%, which is lower than the 16.2% growth the company posted for the March 2026 quarter. This indicates revenue deceleration in the coming quarters as rising use of AI platforms are expected to reduce the development life cycle of products and solutions, which will affect the revenue generation ability.


The company aims to invest in AI capabilities to ensure future business growth, which may keep the operating margin (EBIT margin) in a tight range. "We continue to invest in the AI technology. At the moment, growth is the priority, margins will follow," Vinit Teredesai, ED and CFO, told ET.

Given the AI related disruption and intense competition, analysts have reduced earnings expectations. "We cut our estimates by 4-5%, factoring in a soft March quarter exit and continued reinvestments in AI platforms and consulting capabilities," mentioned Motilal Oswal Financial Services in a review report. The broking firm expects a more gradual margin expansion to 16.7-16.8% over FY27-28E.