Shares of Persistent Systems experienced a sharp decline, falling 8.6 per cent to Rs 3,550 during Monday’s intraday trading on the Bombay Stock Exchange (BSE), after the company announced its financial results for the fourth quarter of the fiscal year 2023-24.
Despite reporting a 25.36 per cent increase in net profit at Rs 315.3 crore and a 14.9 per cent rise in consolidated revenue to Rs 2,590 crore year-on-year, investor sentiment was dampened due to concerns over future profit margins and contract volumes.
The IT services firm also noted a slight decrease in total contract value (TCV) from the previous quarter’s record high of USD 475 million to USD 447.7 million. Moreover, the company's earnings before interest and taxes (Ebit) margin remained unchanged quarter-on-quarter at 14.5 per cent. Persistent Systems expressed intentions to improve margins by 200-300 basis points over the next two to three years and declared a final dividend of Rs 10 per equity share for the financial year.
During the earnings call, management highlighted their objective to maintain top-quartile growth despite a challenging macroeconomic environment but projected that margins would remain flat in the financial year 2025. This guidance appears to have left investors underwhelmed, contributing to the share price decline.
As of 11:15 AM, the company's shares were trading at Rs 3,572, down by 8.11 per cent, in a market where the S&P BSE index was up by 0.59 per cent at 73,518. Over the last month, Persistent Systems’ share price has seen a 10 per cent decrease, following a 23 per cent rise over the past six months. The current trading price places the company at a price-to-earnings multiple of 28.16 times
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