Persistent Systems shares slumped 5.5% in early trade as JP Morgan’s ratings downgraded for the stock dented sentiment. Brokerage and Research firm JP Morgan downgraded Persistent Systems Limited to ‘underweight’ from neutral and cut its target price to Rs 4,100 per share from Rs 4,200.

At 09.31 am, Persistent Systems’ shares traded 3.25% at Rs 4,876.40 on the NSE.

The downgrade was amid the risk related to cuts in discretionary technology expenditure. The company has the highest experience in discretionary technology at 83% compared to peers, whose exposure ranges from 40% to 75%.
JP Morgan stated that the valuation seems expensive as the company’s growth in a stimulating macroeconomic environment restricts potential margin expansion. Thus, earnings will probably decrease by 3% to 4% over FY24-26 amid revenue reductions.

Persistent Systems accomplished a significant milestone in FY2022-23 as its revenue surpassed the billion-dollar mark. Despite suffering flat margin growth, the Pune-based IT services company stated a 3.92% increase in revenue to Rs 2,254.47 crore for March 31 quarter. According to Bloomberg data, the reported revenue topped the agreement estimate of analysts at Rs 2,253.93 crore.

In the full fiscal year, the company saw YoY rise in revenue of 46.20%, reaching Rs 83,505 crore. The revenue increased by 35.3% in US dollars to $1.036 billion. The company also accomplished a contract value of $421.6 million in new deal wins. The yearly contract value amounted to $310.4 million.