Shares of IT services firm Persistent Systems tumbled over 7.3 per cent to hit an intraday low of Rs 5,195.75 on Thursday, July 24, following the release of its Q1FY26 results. At 9:22 AM, the stock was down 7.16 per cent at Rs 5,203.85 on the BSE, significantly underperforming the benchmark Sensex, which was down 0.2 per cent.

Persistent Q1FY26 highlights

Persistent reported a 7.4 per cent sequential rise in net profit to Rs 425 crore, up from Rs 395.7 crore in Q4FY25. Revenue rose 2.8 per cent quarter-on-quarter to Rs 3,333.5 crore. EBIT increased by 2.5 per cent to Rs 517.7 crore. However, the operating margin contracted slightly to 15.5 per cent, down from 15.6 per cent, suggesting continued pressure on profitability.

In dollar terms, revenue rose to $389.7 million, up 3.9 per cent sequentially and 18.8 per cent year-on-year. Constant currency revenue growth was 3.3 per cent quarter-on-quarter and 19 per cent year-on-year.

Growth in Q1 was primarily driven by the BFSI segment, which posted a strong 9 per cent sequential rise in USD revenue. The Technology segment followed with a 3.6 per cent growth. However, the Healthcare and Life Sciences vertical declined 1.9 per cent, impacted by macroeconomic headwinds and client transitions to offshore delivery models.

Persistent posted strong new deal wins in Q1FY26 with Total Contract Value (TCV) at $520.8 million, up 13 per cent year-on-year. Net new TCV and Annual Contract Value (ACV) grew approximately 8 per cent and 7 per cent, respectively. The book-to-bill ratio, however, moderated to 1.3x from 1.4x in the previous two quarters.

Brokerage reactions: Mixed tones, cautious optimism on Persistent

Global brokerages remained divided on the stock:

CLSA maintained a Buy but cut the target to Rs 7,536 (from Rs 7,637)

Nomura stayed Neutral, reducing its target to Rs 5,510 (from Rs 5,700), citing “slowing client decision-making”

JP Morgan held an Overweight rating with a target of Rs 6,500

HSBC maintained Hold, with a target of Rs 6,000

Macquarie and Bernstein retained Outperform ratings with targets of Rs 7,330 and Rs 6,300 respectively

Nomura flagged caution around rich valuations, pointing out that Persistent trades at 41 times FY27 forward earnings.

While Persistent’s deal pipeline and BFSI performance remain encouraging, sustained pressure on margins, weak healthcare performance, and elevated valuations are weighing on investor sentiment. Analysts will closely track the pace of recovery in growth verticals and margin stability in the coming quarters.