Persistent Systems Q2 profit falls 25% on Nagarro deal costs; revenue up 30%

Persistent Systems, the Pune-based software services company, reported a 25.4% fall in net profit for the July-September quarter even as revenue grew about 30%, with the drop driven by costs from its takeover of the German digital engineering firm Nagarro. In results announced on October 15, 2026, for the second quarter of the 2026-27 financial year, the company said revenue rose to Rs 4,663.9 crore, or $487.6 million, up 20.0% from a year earlier in dollar terms and 7.8% from the previous quarter. Net profit fell to about Rs 351.5 crore from Rs 471.5 crore a year earlier. The company booked acquisition-related expenses of Rs 185.34 crore for the Nagarro deal. Its shares fell about 4% after the results, according to market reports.

The quarter shows the two sides of a big acquisition. On the top line, Persistent's revenue grew 20% in dollar terms from a year earlier, and the Nagarro deal adds a sizeable new business. On the bottom line, buying a company costs money up front: advisory fees, financing and integration costs all hit profit before the benefits arrive. The fall in profit is therefore largely a deal effect rather than a sign that Persistent's own business has weakened, though investors will want to see margins recover.

Nagarro SE is a Germany-based digital engineering company. Bringing it under Persistent's control gives the Indian company more scale and a bigger bench of engineers to bid for large digital transformation and AI projects. Chief executive Sandeep Kalra has described the result of the takeover offer as a clear endorsement of the logic of combining the two companies.

The order book is the number to watch. Deals worth $633.5 million signed in the quarter give a view of future revenue, at a time when many clients are cautious about spending and are shifting budgets towards AI. The dip in EBIT margin to 15% from 16.3% reflects the cost of growth and of the acquisition. Brokerages will judge the stock on how quickly those margins return once Nagarro is fully integrated.

Short-term: The share price fell about 4% after the results as investors weighed strong revenue against lower profit. Analysts said revenue beat forecasts but profit after tax missed.

Long-term: If Persistent integrates Nagarro well, it would gain a much larger presence through Nagarro's business. The risks are those of any large deal: integration costs, keeping key staff and clients, and returning margins to earlier levels.

Who is affected: Persistent and Nagarro employees, shareholders of both companies, their clients, and the wider Indian IT sector.

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