Brokerage Report: Citi maintains ‘Sell’ on Persistent, raises target to Rs 5,000

Citi has reiterated its ‘Sell’ rating on Persistent Systems, raising the target price to ₹5,000 from the previous estimate. While the company reported a decent Q3 performance with in-line revenue and better-than-expected margins, the brokerage remains cautious on valuation.

Key observations:

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  • Persistent’s 9-month CFO/EBITDA ratio stands at 50%, reflecting operational efficiency.
  • Headcount increased by 3% QoQ and 2.5% YoY, with utilization at the highest-ever level.
  • Citi revised FY25/FY26 EPS estimates by 2-6%, incorporating recent earnings.
  • The company continues to deliver consistent performance, but valuations at 51x FY26 consensus EPS already price in all positives.

The brokerage acknowledges Persistent’s operational strengths but sees limited upside due to elevated valuations.

Disclaimer: This article is for informational purposes only and does not constitute financial advice.