Sturdy Systems Despite the labor code hit, Q3 profit surged 17.8% YoY and exceeded projections

Mid-tier IT services firm Persistent Systems on Tuesday reported a 17.8% year-on-year rise in net profit for the December quarter, beating analyst expectations, despite taking a one-time charge linked to labour code changes.

Net profit for the quarter stood at Rs 429.4 crore, though it declined 6.8% sequentially, impacted by a one-time labour code-related charge of nearly Rs 89 crore. Excluding this impact, profitability remained resilient.

Revenue rose 23.4% year-on-year and 5.5% quarter-on-quarter to Rs 3,778.2 crore, driven by strong demand in key verticals. The banking, financial services and insurance (BFSI) segment led growth with a 29.3% year-on-year increase, while the software, hi-tech and emerging industries vertical grew 14.7%. The healthcare and life sciences segment lagged, posting 7.4% growth, the company said in its regulatory filing.

In dollar terms, revenue increased 17.3% year-on-year and 4% quarter-on-quarter to $422.5 million, ahead of market expectations of around 3.9% sequential growth on a constant-currency basis.

“Our performance reflects a deeper role in strategic client programmes and sustained demand for data, cloud and digital engineering across our core industries,” said Sandeep Kalra, chief executive officer and executive director of Persistent Systems. “Our priority remains sustaining growth through consistent execution as demand continues to shift toward larger, more complex engagements.”

The company’s EBIT margin came in at 14.4% for the quarter, compared with 16.3% in the previous quarter. Excluding the labour code charge, operating margins stood at 16.7%.

Deal wins remained strong at $674.5 million, up from $609.2 million in the September quarter. The contribution of the company’s top 10 clients to total revenue increased marginally to 43.7%, from 43.2% in the previous quarter, with Persistent adding five large clients during the period.

Persistent’s headcount rose to 26,711 at the end of December, an increase of 487 employees sequentially and 2,770 year-on-year. Trailing 12-month attrition improved to 13.5% from the previous quarter, though it was higher than 12.6% reported a year ago.

The board also declared an interim dividend of Rs 22 per share (face value Rs 5) for FY26. The record date is January 27, 2026, and the dividend will be paid within 30 days.