Persistent Systems Q2 Results (October 15): Profit Falls 25% on Nagarro Costs as Revenue Grows 20%

Persistent Systems’ Q2 results, out on Thursday, October 15, had two very different numbers on top. Dollar revenue grew 20.0% year-on-year to $487.6 million, the company’s 26th straight quarter of sequential growth. Reported net profit fell 25.4% year-on-year to ₹351.5 crore. The gap between the two is mostly one item: the cost of buying Germany’s Nagarro.

Persistent Systems Q2 results: the key numbers

All figures below are consolidated, for the quarter ended September 30, 2026, and come from the company’s Q2 FY27 press release.

• Revenue in dollars: $487.6 million, up 7.8% from the June quarter and 20.0% from a year ago. In constant currency, year-on-year growth was 20.8%.
• Revenue in rupees: ₹4,663.9 crore, up 8.4% sequentially and 30.3% year-on-year.
• EBIT: ₹697.7 crore, up 19.5% year-on-year, at a margin of 15.0% of revenue.
• Operating profit after tax (the company’s measure that leaves out the Nagarro expenses): ₹495.2 crore, up 5.0% year-on-year, a 10.6% margin.
• Reported net profit: ₹351.5 crore, down 27.2% from the June quarter and 25.4% from a year ago.
• Order booking: $633.5 million in total contract value and $481.0 million in annual contract value.

Why profit fell while sales grew

The quarter carried a one-off expense of ₹185.34 crore tied to the Nagarro deal, Moneycontrol reported. Persistent says it has secured about 94.04% of Nagarro’s share capital and voting rights, excluding treasury shares. Shareholders have also approved an equity raise of up to $450 million, with equity and borrowings together capped at $1,250 million.

Strip that cost out and the business still had a softer quarter on margins. EBIT margin slipped 100 basis points to 15%, below the 15.5% the Street had pencilled in, according to Moneycontrol. The reasons it listed were wage hikes, lower utilisation and amortisation linked to a large deal. Management expects margins to move back towards its aspirational 16-17% band.

How the stock reacted

The market didn’t wait for the margin recovery. On Friday, October 16, Persistent fell as much as 6% intraday and was down 3.4% at ₹5,640 in afternoon trade. That stood out, because the Nifty IT index was up 3.1% at the time and Persistent was one of only two index constituents in the red. Moneycontrol put the stock’s fall so far in 2026 at 10.2%, against an 11.7% drop in the Nifty 50.

Brokerages didn’t agree on what it means. CLSA kept its high-conviction outperform rating with a ₹6,488 target, and JPMorgan stayed overweight with a ₹6,400 target, pointing to revenue growth that beat its expectations. JPMorgan also flagged that deal TCV grew only 4% year-on-year, as some closures slipped into the December quarter. Nuvama stayed at hold and trimmed its target to ₹5,450 from ₹5,500, citing expensive valuations and Nagarro-related risk.

What we’d watch next

Two things, mainly. First, whether EBIT margin climbs back towards 16% once the large-deal amortisation settles, since that drives the operating profit line more than revenue does right now. Second, how Nagarro gets funded and folded in, because the equity raise and new debt will change the per-share math. If you want a framework for reading a quarter like this one, our guide on how to analyse quarterly results walks through margins and one-offs. For how Persistent’s peers fared, see our coverage of LTM’s Q2 results and IT stocks after the TechM and Wipro numbers.

Disclaimer: This article is for information only and is not investment advice or a recommendation to buy or sell any security. Figures are from Persistent Systems’ press release and the news report linked above. Consult a SEBI-registered investment adviser before making investment decisions.