Coforge share price and Persistent Systems shares rallied up to 10% in early trade on Thursday after the IT companies reported their Q3 results. Coforge shares were locked in the 10% upper circuit at ₹9,047.60 apiece on the BSE. Persistent Systems share price spiked as much as 9.05% to ₹6,200 apiece.
The Tier-2 IT companies - Coforge and Persistent Systems - posted strong earnings for the third quarter of FY25.
Coforge posted a net profit of ₹215.5 crore in the fiscal third quarter ended December 2024, a rise of 6.6% from the September quarter.
The company’s Q3FY25 revenue growth stood at 8.4% quarter-on-quarter (QoQ) at ₹3,318.2 crore. In constant currency (CC) terms, revenue grew by 8.4% on a sequential basis, while in US Dollar terms, topline rose by 7.5% QoQ to $397 million.
At the operational level, EBIT increased to ₹316.2 crore from ₹287.6 crore in the previous quarter, while EBIT margin improved to 9.5% from 9.4%, QoQ.
Coforge has also signed an agreement to acquire 100% stake in Xceltrait Inc. for $17.85 million.
Coforge also announced an interim dividend of ₹19 per share. Coforge dividend record date has been fixed as January 30, 2025.
Persistent Systems’ net profit in Q3FY25 rose by 14% QoQ to ₹373 crore.
Revenue in US Dollar terms stood at $360.2 million, a growth of 5% from last quarter. A CNBC-TV18 poll had expected Persistent's US Dollar revenue to be at $362.7 million.
The company’s revenue increased by 5.7% to ₹3,062 crore. In constant currency terms, revenue growth was at 4.6%.
EBIT during the quarter registered a growth of 12% from last quarter to ₹456 crore, while EBIT margin improved by 90 bps QoQ to 14.9%%.
Persistent Systems also declared an interim dividend of ₹20 per share.
“Persistent continues to lead the industry with 19.8% YoY growth in the quarter and its FY31 guidance requires ~24% CAGR over FY25–31. Management is taking the right steps diversifying into new verticals and expanding its current verticals into sub verticals, with a focused plan to scale up each of them meaningfully. At 50x FY26E PE, the stock appears expensive, but that is justified in our opinion given PSYS’s healthy growth profile (25% earnings CAGR over FY24–27E,” said Nuvama Institutional Equities.
The brokerage firm retained its ‘Buy’ rating and increased Persistent Systems share price target to ₹7,000 per share from ₹6,350 earlier.
Motilal Oswal projects a 19% USD revenue CAGR over FY24-27E for Persistent Systems, which, combined with margin expansion, could result in a ~21%+ EPS CAGR. This places the company in a league of its own as a diversified product engineering and IT services player, justifying a premium valuation multiple.
“Our estimates are largely unchanged. The stock is currently trading at an admittedly expensive valuation. That said, owing to its superior earnings growth trajectory, on a PEG basis, we believe the valuation still has room for upside. We value Persistent Systems at 55x FY27E EPS,” MOFSL said.
The brokerage firm reiterated a ‘Buy’ rating with a target price of ₹7,600 per share.
Coforge share price has rallied 20% in three months and more than 46% in six months. The stock has jumped 108% in the past two years.
Anshul Jain, Head of Research at Lakshmishree Investment and Securities noted that Coforge shares opened with a gap-up today, showing robust momentum as it crossed the falling 10, 20, and 50-day moving averages with an impressive volume surge — 380% higher than its 50-day average volume.
“This sharp increase in activity highlights strong buyer interest and signals the potential start of a reversal. If Coforge stock sustains above the critical ₹9,100 level, it could rally toward the ₹10,000 – ₹10,500 range, offering a promising opportunity for traders and investors. The confluence of technical factors and strong volumes make Coforge a stock to watch in the coming sessions,” Jain said.
Meanwhile, Persistent Systems share price has fallen 4% in one month, but has rallied 28% in six months and more than 49% in one year. The IT stock has delivered mutlibagger returns of 170% in the past two years.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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