Persistent Systems shares drop 6% on mixed Q2 show as margins miss estimates; what do analysts predict next?

Persistent Systems shares declined around 6% during the trading session on Friday, October 16, as investors focused on the midcap IT company’s sequential decline in consolidated net profits, while margins largely missed market estimates.

NSE data showed that Persistent Systems shares dropped around 6% to hit an intraday low of ₹5,492 apiece on Friday’s market, in comparison to ₹5,840 apiece at the previous equity market close.

Trading activity surpassing 13 lakh equity shares across NSE and BSE combined triggered the high-volume losses during the market session on October 16, with investors exercising selling pressure after the subdued earnings.

Experts said that the company’s revenue growth was in line with the market estimates and was powered by the large tech deal ramp-ups and Persistent winning an in-vendor consolidation exercise at a large BFS client.

The key focus of investors is expected to remain on margins and market expectations of slower client decision-making in the upcoming period.

Q2 earnings snapshot

The company attributed the decline in PAT to being largely driven by the ₹185.34 crore exceptional expense related to the proposed Nagarro acquisition in the period under review.

Looking at a year-on-year basis, Persistent’s profits dropped 25.4% to its September quarter levels, from ₹471 crore in the second quarter of FY26.

In contrast, the midcap IT company’s revenue from core operations advanced by 8.3% to ₹4,664 crore in Q2 FY27, from ₹4,303 crore in Q2 FY26, as per the exchange filings.

Although the company registered revenue growth in the period under review, the overall consolidated profits declined sequentially due to the 13% surge in overall expenses in the September quarter.

“Primary driver of miss was an elevated level of interest expense (due to increased current liabilities) and higher FX losses,” said CLSA analysts.

Margin concerns ahead?

Analysts from US-based JPMorgan and Japan’s Nomura Group said that Persistent’s margins missed their estimates while the revenues remained in line in the July to September quarter results for FY27.

Data showed that the company’s EBIT margins contracted to 15% in the period under review, in comparison to 16% in the previous quarter, according to the latest NSE filing.

“EBITDA margin was flat and came in line, but EBIT margin declined 100 bps QoQ to 15% due to higher amortisation costs from large tech deal product takeovers that will likely continue going forward, leading us to cut margins by 40-60 bps, driving 2-4% cuts to adj EPS,” said JPMorgan analysts.

Looking ahead, Nomura analysts also said that the company's margins are likely to be hit in FY27 by large deal executions.

Order book review

Persistent Systems’ order book for the quarter ended on September 30, 2026, was $633.5 million in Total Contract Value (TCV) and $481.0 million in Annual Contract Value (ACV), as per the company filing.

“Overall deal TCV was soft at 4% YoY, but it highlighted that some deal closures slipped to 3Q due to delays in client decision-making in the last few weeks of the quarter stemming from macro-related uncertainty,” said JPMorgan analysts after reviewing the Q2 results.

However, the company remains confident of its growth going forward with key support from deal wins and a healthy pipeline.

Stock down over 9% YTD

On a year-to-date (YTD) basis, Persistent’s stock has declined 9.7% in 2026, but has risen 4.2% in the last one-month period. The exchange data also showed that the stock has lost 1.7% in the past five market sessions.

NSE data showed that Persistent Systems shares have delivered 438% returns to investors in the last five years, and over 293% gains on their investment in the last three years. However, the stock has declined nearly 3% in the past one year.

Shares of Persistent Systems surged to their 52-week high of ₹6,599 apiece on December 23, 2025, while the 52-week low was at ₹4,244.50 apiece on June 30, 2026.

The company’s market capitalisation (m-cap) was at ₹89,089 crore as of the trading session on Friday, October 16, 2026.