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JPMorgan has maintained its overweight call on the company, however, the target price of ₹6,100 implies that the global brokerage sees a potential downside of 5.8% from the closing price of December 13.
Nonetheless, the brokerage believes the firm’s growth outperformance is led by client mining, winning in vendor consolidation and GenAI pivot.
As the October to December 2024 quarter nears its end, the brokerage believes that Persistent Systems’s BFSI and healthcare segments will continue to drive growth with a gradual pick up in hi-tech. It is of the view that the Pune-based company’s clients sound more optimistic with US elections and Fed rate cuts behind.
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The reason why Persistent Systems stands out for JPMorgan is the firm’s priority on growth over margin as the latter can be recouped over a period of time. The brokerage also expects GenAI to drive nearly 25% productivity benefits and noted that it won’t be deflationary.
JPMorgan’s commentary comes days after CLSA earlier this month gave the stock its highest target price of ₹8,462 on the back of multiple growth drivers.
The brokerage is of the view that Persistent Systems is operating in a different league on the back of a unique set of capabilities. It sees an increase in both near-term and longer-term revenue growth forecasts. It has projected the firm to witness a 21% US dollar sales compound annual growth rate (CAGR) over FY25-27.
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In fact, on November 27, JPMorgan had also said that Persistent Systems is the most expensive tech stock globally with one year forward P/E of 58x. It was of the view that valuation is likely to sustain or it could even re-rate further.
Persistent Systems shares traded 0.02% lower at ₹6,476.50 on NSE at 10:25 am.
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