Persistent Systems soars 10% on strong Q3 show; Should you buy, sell or hold?

Nuvama also maintains a 'Buy' on the counter with a target of ₹9,050 a share from ₹8,600 earlier. According to the brokerage, the management continues to be confident of delivering industry-leading growth in FY24 and margins expanding over the next two years. "We remain confident of the stock doing well on the back of its industry-leading performance," it said.

Nuvama remains positive on Persistent and expects it to outperform peers, given its strong positioning in the digital transformational space, significant margin levers, and the sweet spot that it is in ($1 billion revenue range). Valuation (at 35 times FY26E PE) might appear expensive—but is justified in our opinion given the company’s strong growth profile.

Along with its quarterly results, Persistent Systems has also approved its highest-ever dividend payout for the October-December period.

The board approved an interim dividend of ₹32 per share, which is the highest that the company has announced on record. Last January, the board approved a dividend of ₹28 per share. The record date for this dividend payout is yet to be determined.

Additionally, the company has also approved a split of its equity shares in the ratio of 1:2. This means that one equity share with a face value of ₹10 will be split into two equity shares with a face value of ₹5. The stock split is expected to be completed within three months of obtaining the necessary approvals.

This was also the first-ever quarter where Persistent Systems crossed $500 million in Total Contract Value (TCV) bookings. Order bookings for the quarter stood at $521.4 million.

"This was the first time we had order book in excess of $500 million. The total contract value for the quarter came in at $521.4 million. And this is the first time that $500 million has been crossed for us. Now, this has been a series of quarters where we have done good order books. And even if you look at our last several quarters, the ramp up that we are seeing for the new order book is what is driving our growth. So that should give you enough data points for determining where the future is," said Sandeep Kalra, CEO at Persistent Systems.

In a conversation with CNBC-TV18, Kalra said that it'll be two to three quarters before the discretionary spending picks up.

He further said the degrowth in BFSI was primarily on account of furloughs. "And that should see a comeback from a furlough not being there in the fourth part of it. And overall, the order book also supports a healthy trend going forward. So yeah, you're right in saying what you said."