Persistent Systems: Moving to an OW rating and Rs6,400 PT from NR

J.P. Morgan upgrades Persistent Systems (PERS.NS) to Overweight from Not Rated with a Sep-27 price target of Rs6,400, based on 30x one-year forward P/E versus 24x for Coforge, justified by a 17% organic constant-currency revenue CAGR over FY26-28E, the fastest in its coverage. 2QFY27 was mixed: revenue grew 7.8% CC QoQ and came in about 150bps ahead of consensus, driven by large tech deal ramp-up and an in-vendor consolidation win at a large BFS client, while EBIT margin fell 100bps QoQ to 15% on higher amortization of about $4mn per quarter from the IBM products deal; EBITDA margin was flat. Deal TCV was $634mn, up 4% YY, with some closures slipping to 3Q due to macro-related delays in client decision making. Management maintains its 16-17% FY27 EBIT margin aspiration. JPM cuts FY27-29E margins by 40-60bps and adjusted EPS by 2-4%;