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Resilient growth & outlook amid macro uncertainty

Quick Pointers

* Steady Growth, Slight Miss on Estimates in Q4

* Deal wins impacted by seasonality in Q4

The revenue performance (+3.4% QoQ CC) was below our estimates (+4.3% QoQ CC), attributed to passing productivity benefits to its marquee accounts. Barring this impact, the execution remained strong in terms of winning new business ACV, grew 37.7% YoY in Q4 and 22.7% YoY in FY26. Despite the escalating geo-political tension, management expects growth momentum to continue within all three verticals. The deployment of products and solutions benefits in terms of optimizing resources and achieving faster time-to-market. Management maintained its aspiration to achieve annualized revenue run-rate of US$ 2 bn and US$ 5 bn by FY27E and FY30E, respectively. However, we are factoring-in the quarterly miss and slightly turning conservative, while considering the AI-led productivity pass back and geo-political factors. We are trimming our CC revenue estimates to 16.5%/17.9% (from 17.9% and 18.9% earlier).  We are keeping our margin estimates largely unchanged. We assign 35x to FY28E EPS to arrive at a TP of INR 6,400. Retain BUY

Revenue: PSYS reported Q4 revenue of USD 436mn, growing 3.4% QoQ CC and 3.2% QoQ in reported terms, below our estimate of 4.3% QoQ CC, with growth relatively broad-based across segments. Healthcare led the quarter with 6.9% QoQ growth, supported by continued deal traction and ramp-ups, while BFSI growth moderated to 1.7% QoQ after a strong run over the past seven quarters, and the Tech segment grew 2.2% QoQ. For FY26, revenue came in at USD 1.65bn, up 17.4% YoY in reported terms, driven by strong performance in BFSI (+28.4%), followed by Tech (+13.9%) and Healthcare (+10.0%).

Operating Margin: Q4 operating margin came in at 16.3%, down ~40 bps QoQ and slightly below our and consensus estimates of 16.5%, impacted by headwinds from higher consulting expenses (-60 bps) and higher subcontracting and related costs (-70 bps), partly offset by tailwinds from operational efficiencies (~+40 bps) and favourable currency (~+60 bps). For FY26, PSYS reported an EBIT margin of 15.6%, up 90 bps YoY, supported by operating leverage and efficiency improvements despite continued investments in growth and capabilities.

Deal Wins: Total deal wins in Q4 were impacted by seasonality, with TCV moderating to USD 601mn (–11% QoQ), while new TCV wins came in at USD 409mn (+11% QoQ). ACV stood at USD 445mn (–11% QoQ), with new ACV at USD 273mn (+6.6% QoQ), indicating continued strength in new deal wins. For FY26, TCV reached USD 2.4bn (+14.4% YoY) and ACV stood at USD 1.8bn (+21.6% YoY).

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