Persistent Systems shares slump 9% on Q4 miss, flat FY25 margin guidance

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April 22, 2024
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Persistent Systems | CMP Rs 3,510 | Persistent Systems stock plunged over 9 percent after the company gave a flat margin guidance for FY25 when it announced its Q4 results. Persistent Systems reported an 25.36 percent rise in net profit to Rs 315.3 crore year-on-year for the fourth quarter.

Shares of Persistent Systems (PSYS) tumbled more than 9 percent on April 22, the biggest single-day drop in the stock since March 2018, a day after the IT services company’s reported fourth quarter earnings. A flat margin guidance for FY25 disappointed the street.

Persistent Systems also recommended a dividend of Rs 10 a share.

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The IT player recorded a total contract value (TCV) of $447.7 million, a slight decrease from the previous quarter’s $475 million, which was its highest-ever deal win, the company said on April 21.

During the earnings call, the company’s management said its objective over the next 12 months is to sustain top-quartile growth in a challenging macro environment, while maintaining margins at current levels.

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The fourth quarter performance was beat on both the top and bottom lines but was a miss on operating margin due to high sub-con costs, DART Research said in a note.

At 1.34 pm, Persistent shares were trading 9 percent lower at Rs 3,530.45 on the National Stock Exchange (NSE). In the last one year, the stock has rallied 59 percent. In comparison, benchmark Nifty has risen 25 percent.

According to analysts, the stock may also be witnessing some profit booking from elevated levels considering the rally over the last few years.

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Also Read | Persistent Systems Q4 results: Net profit rises 25.36% YoY to Rs 315.3 crore; board recommends final dividend of Rs 10 per share

Persistent Systems has been the best performer among all IT stocks over the last five years, rising over 1,100 percent starting May 2019. Out of the 38 analysts that have coverage on Persistent Systems, 15 have a “buy” recommendation, 12 “hold” and 11 have a “sell” call on the stock.

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