Persistent Systems share price

Persistent Systems’ Q2 FY24: 23.4% Profit Growth—Is This the Tech Stock You Can’t Afford to Miss?

Mid-tier IT services company, Persistent Systems Ltd, continues its strong growth trajectory with a 23.4% year-on-year (YoY) increase in net profit for the second quarter that ended on September 30, 2024. The company reported a net profit of ₹325 crore, up from ₹263 crore in the same quarter last year, showcasing its resilience and adaptability in a competitive tech landscape.

Persistent’s revenue from operations surged by 20.1%, reaching ₹2,897 crore compared to ₹2,412 crore in Q2 FY23. This impressive growth underlines the company’s ability to expand its business offerings and cater to evolving client needs, driven by its focus on AI-led, platform-driven services.

Steady Quarter-on-Quarter Growth

In dollar terms, Persistent Systems’ revenue hit $345.5 million, up from $328.2 million, reflecting a 5.3% growth over the June quarter of the current fiscal. The company’s constant currency revenue growth for Q2 stood at 5.1%, reinforcing its robust quarter-on-quarter (QoQ) performance.

Despite the stellar performance, Persistent Systems’ shares saw a slight dip after the results announcement, closing at ₹5,168, down by 1.53% or ₹80.10 on the BSE. However, this decline is largely seen as a short-term market reaction rather than an indicator of long-term performance.

Impressive EBIT Growth and Margins

The company’s earnings before interest and taxes (EBIT) rose by 5.8% QoQ, reaching ₹406.2 crore in the September quarter, compared to ₹384 crore in the June quarter. The EBIT margin remained flat at 14%, reflecting stability in operational efficiency despite challenges in the broader market.

The steady EBIT growth is a testament to Persistent’s ability to manage costs effectively while continuing to drive revenue growth across key business segments.

Strong Order Book and Future Outlook

Persistent Systems secured $529 million in total contract value (TCV) during Q2 FY24, with an annual contract value (ACV) of $348.3 million, signaling a healthy pipeline of future business. The strong order book emphasizes the growing demand for the company’s digital transformation solutions, especially in AI and cybersecurity.

Sandeep Kalra, Chief Executive Officer and Executive Director of Persistent Systems, expressed his satisfaction with the results, stating, “We are proud to announce the 18th consecutive quarter of revenue growth, delivering $345.5 million in revenue—an 18.4% year-over-year increase. Our profit after tax (PAT) also grew by 23.4% in rupee terms.”

Strengthening AI-Led and Platform-Driven Services

Persistent Systems has been strategically focusing on strengthening its AI-led and platform-driven services to enhance its client offerings. The addition of Starfish Associates has significantly bolstered its AI-powered contact center modernization capabilities, while the acquisition of Arrka has expanded its digital governance solutions, including data privacy, AI governance, and cybersecurity services.

Kalra further added, “This quarter, we continued to strengthen our capabilities and advance our AI-led strategy. These strategic moves position us well to capitalize on the growing demand for digital governance and AI-powered transformation across industries.”

The company’s long-term outlook remains positive, driven by its focus on leveraging advanced technologies to meet evolving client demands.

Conclusion:

Persistent Systems has showcased its consistent ability to drive both profit and revenue growth, with Q2 FY24 results reflecting a solid 23.4% YoY profit increase and a 20.1% rise in revenue. Persistent Systems share price, The company’s strategic focus on AI-led, platform-driven services, along with its commitment to digital governance and cybersecurity, sets it up for continued success. As Persistent Systems strengthens its position in the IT services sector, investors and stakeholders alike will be keenly watching how the company navigates the ever-evolving digital landscape.