The IT services sector is often viewed as a monolith of headcount-based growth. Persistent Systems (PERSISTENT) challenges this narrative by focusing on specialized, high-velocity engineering.
The “Orchestrator” Valuation
Analysts often misprice Persistent because they compare it to legacy Tier-1 IT giants.
- Morningstar Rating: Classified as “Large Growth” with an “Overvalued” signal—but this ignores the premium attached to agility.
- Growth Metrics: FY25 revenue hit $1.4B (+18.8% YoY) with PAT growing at 28.0%. These are not utility-like returns; they are SaaS-like returns in a services wrapper.
MD&A Highlights: FY26 and Beyond
The management’s vision is clear: $2 Billion by FY27.
Reading the Annual Report, the confidence stems from their “AI Ecosystem” strategy. They aren’t just building apps; they are the implementation partners for the hyperscalers.
- Hyperscaler Strategy: Deep integration with AWS, Azure, and Google Cloud to deploy GenAI solutions.
- Margin Expansion: Targeting a 200-300 bps profit margin expansion over the next 24 months.
Why We Are Buying
We see Persistent as a leveraged play on enterprise digital transformation. As Fortune 500 companies move from “AI Experiments” to “AI Production,” they won’t call the cheapest vendor; they will call the most specialized one. Persistent allows us to capture this deployment cycle without betting on a single software winner.