Persistent Systems Shares Hit New High Post Q3 Results and Announce Dividend and Stock Split

Shares of the IT company Persistent Systems reached a new peak on Tuesday, largely driven by the company's robust financial performance that exceeded market expectations. The share price witnessed an impressive surge, hitting the day's high of Rs 8,716.7 on the Bombay Stock Exchange (BSE) - a significant 10% jump that triggered the upper circuit limit, marking the highest value the shares have ever traded at.

Following the initial surge, the share prices still stayed strong, with an increase of 7.2% over the course of the morning, bringing the price to Rs 8,498.2 per share.

Financial Highlights

Persistent Systems announced its third-quarter results after the market closed on the previous Saturday, highlighting a 20.2% rise in year-on-year consolidated net profit at Rs 286.1 crore for the quarter ending December 31. The company's performance was strengthened by a robust order book, with net profit rising by 8.7% from the previous quarter. Furthermore, the company's revenue showed a 15.2% increase compared to the same period from the previous year, reaching Rs 2,498.2 crore. Notably, the company's profitability margin also showed improvement, increasing by 80 basis points sequentially to 14.5%.

The exceptional financial results surpassed the forecasts of analysts who had estimated the company's net profit at around Rs 280 crore, with revenue at Rs 2,498 crore, and the margin at 14.2%.

Investor Guidance and Brokerage Ratings

Several brokerages have updated their guidance on Persistent Systems' stock following the earnings release. HSBC upgraded the stock rating to ‘buy’ from ‘hold’, significantly raising their stock price target by Rs 2,925, suggesting a potential 24.6% upside from its previous closing price. Alternatively, JPMorgan kept its ‘neutral’ stance but increased its target for the stock by Rs 200, aiming for Rs 7200 per share.

Nomura stuck to its ‘neutral’ rating, albeit with an adjusted target price of Rs 7,600 up from Rs 7,000. On a different note, Citi retained a ‘sell’ recommendation, even though it adjusted its target to a higher Rs 5,470 from Rs 5,035. Citi's analysis indicated that even though Persistent's Q3 results were better than expected, the brokerage found the stock valuation to be on the expensive side.

Corporate Announcements: Stock Split and Dividend

In another major development, the board of Persistent Systems approved a proposal for a stock split, planning to halve the current face value of the company's shares from Rs 10 to Rs 5. Additionally, the board declared an interim dividend of Rs 32 per share for the financial year 2023-2024, further sweetening the deal for shareholders.

Moving forward, the market will closely watch Persistent Systems' performance, especially considering that the company's headcount has seen an increase and the total contract value has grown. The company has noted no substantial change in the demand environment but has observed emerging positive signals in the industry.

Persistent, Shares, Dividend