Persistent Systems targets $2 billion revenue by FY27; margins on upward trajectory

Pune-based IT services company Persistent Systems Ltd is aiming to reach $2 billion in revenue by FY27.

Vinit Teredesai, CFO of Persistent Systems, said, “As we get to the $2 billion journey by FY27 we want to improve our operating margins by 200 to 300 basis point.”

The company has already made significant progress. Its operating margin has grown from around 14–14.5% to 16.3% in Q2FY26, with the first half of FY26 averaging 15.9%.

Teredesai added that if the company maintains its current approach, it could see an additional 100 basis point improvement over FY25, and another 100-basis point by FY27, keeping the planned 200–300 basis point margin expansion on track.

Persistent Systems is focusing on operational efficiency and disciplined hiring. “We are running a very tight shop. Looking at the labour market, both demand and supply, we don’t believe we need aggressive hiring. We are hiring to the requirements, just in time, and able to deploy these employees immediately on business,” Teredesai said.

In the July–September quarter of 2025 (Q2FY26), Persistent Systems reported a net profit of ₹471.4 crore, revenues of ₹3,580 crore, and an EBIT margin of 16.3%.

Persistent Systems’ current market capitalisation is ₹89,702 crore. The stock ended Friday’s trading session at ₹5,755.70 on the NSE and has gained around 4% over the last year.

Below is the verbatim transcript of the interview.

Q: You’ve guided for a 100-basis points EBIT margin expansion in FY26 and FY27. How will you get there? What’s the glide path here?

Teredesai: Two years back, when we basically started this journey, we had stated that as we get to the $2 billion target by FY27, we want to improve our operating margins by 200 to 300 basis points. At that point of time, we were roughly in the 14 to 14.5% range.

If you look at FY25, we delivered a 14.5% operating margin. Now in the first quarter of FY26 we delivered 15.5%, in the second quarter we delivered 16.3%. So, we are roughly at 15.9% for the first half. What we have said is that for this 200 to 300 basis points, if we just sustain what we are doing at this point of time, that will be 100 basis points of improvement over FY25, and as we enter FY27, we would like to see if we can improve it by another 100 basis points. So that’s the 200–300 basis point trajectory that we have been talking about.

At this point, if you look at it, the levers are pretty much what we have already mentioned. We have seen our utilisation continue to remain very high — we are running a very tight shop at this point of time. Looking at the labour market, both from a demand and supply perspective, we don’t believe that we need to do any aggressive hiring. We are hiring to requirements, we are hiring just in time, and we are able to deploy these people immediately on business. That’s how things are working.

Q When you’re looking at revenue growth in Q2 — a very strong growth of 4.4% led by BFSI, which was up almost 7%, with healthcare and high-tech verticals also doing well — what led to that? Has the demand environment improved, or is it better execution by the company, or any other factor? And how sustainable is the 4% plus run rate? How is H2 looking?

Teredesai: In the last two years, our growth was driven very heavily by healthcare and life sciences, and that now is going through a consolidation phase. While it has grown sequentially in this particular quarter, we anticipate that it is not going to grow at the same pace as it has in the last two years.

But more importantly, the banking and financial services vertical — which has been a very important one for us — has benefited from the investments we’ve made in leadership, sales, and new relationships. We are now able to see the fruits of those efforts. We are seeing good traction. We’ve been able to open up new logos and scale up existing ones in the North American region, and we are now taking that focus into the European region as well.

All these factors, and some of the investments made over a period of time, are yielding results. Needless to say, at least sentimentally, there is an expectation that interest rates will continue to go down in the US over the next couple of quarters. That is a positive trigger for us and will give a bit of a credit uptake, which will benefit overall spending.

But at the same time, let’s be realistic — it’s not that there’s a sudden change in demand happening. The environment continues to remain challenging. You have to do your hard work, and we believe our focus at this point should be to keep our heads down, focus on relationships, stay close to customers, commit only what we can deliver, and ensure flawless execution.

Q: Do you think BFSI will anchor growth for you? It’s around 35% of your revenues today. Can BFSI’s contribution inch up to around 40%?

Teredesai: Yes, it can go even higher than that. If you look at it, our BFSI practice is roughly a half-billion-dollar business. If you look at the competition, many peers have BFSI practices equivalent to our overall revenue. So, the total addressable market is quite large, and we believe that our focus on banking, financial services, wealth management, and capital market companies within that sub-segment is very important for us.

We have hired leaders, started doing our planning exercises in that fashion, rolled out our targets accordingly, and are looking at this sub-segment as a growth engine for the overall BFSI business. All of these things are positive for us and should drive growth.

Q: Now, getting back to the earlier question on growth — is H2 looking materially better than H1, or will it be tough, given that seasonally Q3 sees furloughs?

Teredesai: At this point, what I can say is we don’t give forward-looking guidance. But what we have said is that our $2 billion journey by FY27 continues. In the last two quarters, we have delivered consecutive sequential growth. Our order pipeline is very strong.

A couple of deals in the pipeline at this point look very promising. If we are able to close them, we believe this will help us maintain the momentum, unless, of course, any unforeseen event occurs — which is not in anyone’s control. But we’ll tackle such uncertainty as it comes.

Q: Let’s talk about the H-1B visa issue. How many employees have you sent on H-1B visas, and will you bring this number down with the recent hike in visa fees?

Teredesai: If you look at it, even before the proclamation or the current administration came into play, we had been reducing our dependence on H-1B visas significantly. Over the last few years, around 60% of our hiring has happened locally — mainly green card holders and citizens.

Number two, we don’t differentiate between an H-1B and a local hire. We pay the same wages. We also have a good inventory of people who are visa-ready and can travel. Our applications for H-1B visas from India this year are minuscule. We are not making many applications because there isn’t much demand coming from customers.

So, we don’t believe this H-1B visa fee increase is going to have any impact on us in the short or medium term. If things change in the future, we’ll look at it then. But at this point, we are well covered. We have enough people who can travel if the need arises, and the new fee is applicable only on new applications filed from India.

Q: What is the total number of new H-1B visa applications from India for you this year?

Teredesai: It’s virtually in the low single digits. That’s the number of applications we’ve made this year.Read about our editorial guidelines and ethics policy