Persistent Systems shares touch record high after IT firm posts Q3 results, announces dividend, stock split; what should investors do?

Persistent Systems shares soared to a record high on Tuesday riding on the back of better-than-expected financial results. The stock of Pune-based Persistent Systems zoomed by as much as Rs 792.4 to breach the 10 per cent upper circuit and register an all-time high of Rs 8,716.7 apiece on BSE. The company also announced an interim dividend as well as a share split plan.

Persistent Systems shares hovered close to the record high later on in morning deals, up 7.2 per cent for the day at Rs 8,498.2 apiece on the bourse.  

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After market hours on Saturday, January 20, the IT firm reported a 20.2 per cent year-on-year rise in consolidated net profit to Rs 286.1 crore for the quarter ended December 31, driven by a strong order book on January 20. The net profit increased 8.7 per cent sequentially. 

Its quarterly revenue grew 15.2 per cent to Rs 2,498.2 crore compared with the corresponding period a year ago, according to a regulatory filing. Sequentially, the revenue increased 3.6 per cent.

The company's margin, a key measure of profitability, improved by 80 basis points sequentially to 14.5 per cent. 

According to Zee Business research, Persistent Systems' quarterly net profit was estimated at Rs 280 crore, revenue at Rs 2,498 crore and margin at 14.2 per cent. 

Persistent Systems share price target: Should you buy, sell or hold?   

HSBC double-graded Persistent Systems to ‘buy’ from ‘hold’ after the earnings announcement by the IT firm, and raised its target for the stock by Rs 2,925 to Rs 9,875, which implies an upside of 24.6 per cent from the previous close.   

JPMorgan maintained its ‘neutral’ call on Persistent while raising its target for the stock by Rs 200 to Rs 7200. 

Nomura continued with its ‘neutral’ rating on Persistent with a revised target of Rs 7,600 instead of the Rs 7,000 earlier. 

Citi, on the other hand, maintained a ‘sell’ call on the counter, though it raised its target for the stock to Rs 5,470 from Rs 5,035. 

While Persistent’s third quarter results were better than Citi’s estimates, the brokerage found its valuation expensive at 45 times the one-year forward consolidated EPS.  

According to the brokerage, the forward-looking indicators are: 

• Headcount up 3.3 per cent YoY 
• TTM overall ACV growth at 15 per cent YoY 
• No change in demand environment but seeing some green shoots 

Persistent Systems stock split 

Persistent Systems' board gave nod to a proposal to split the face value of the company’s shares from Rs 10 per share to Rs 5 per share. 

Persistent Systems dividend 

The board also declared an interim dividend of Rs 32 per share on the face value of Rs 10 each for the financial year 2023-2024. 

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Meanwhile, stock exchanges BSE and NSE observed a holiday on Monday, January 22, on account of the much-anticipated inauguration of the Ram Temple with a ‘pran pratishtha’ ceremony in Ayodhya, Uttar Pradesh.

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