Persistent Systems (PSYS IN) – Q3FY26 Result Update – Margin surprises positively, Platform strategy pays off – BUY
Published on 21 Jan 2026
The revenue performance (+4.1% QoQ CC) exceeded our estimates (+3.2% QoQ CC), aided by broad-based growth across verticals. The company’s participation in complex areas of data and AI-led product engineering translates into better growth opportunities. The growth visibility looks encouraging for 9MFY26 ACV at USD722m (+18% YoY), while New Business ACV stood at USD256 (+18% YoY). The early investments in IPs and accelerators are paying off well in the form of deriving better productivity and scaling tailored solutions, Sasva (AI-powered platform) helps optimize project cycle and pass productivity benefits. The management maintained its aspiration to achieve revenue milestones of USD2b and USD5b by FY27E and FY30E, respectively. On margins, despite having wage hike (impact of ~180bps) in Q3, the company was able to absorb the impact through one of the IP-led deals, that constructs in a way it assumed upfront revenue recognition. We are largely keeping our revenue estimates unchanged at 17.9%/18.9% YoY CC in FY27E/FY28E, while revising our margins upward by 60bps each in FY27E/FY28E due to beat in Q3. We assign 40x to FY28E EPS to arrive at a TP of INR 7,360. Retain BUY.
