Persistent Systems Q2FY27 Results: Net profit falls 25% QoQ to ₹3,515 crore
- Consolidated net profit fell 25.4% QoQ to ₹3,515.14 million, missing analyst estimates of ₹5.57 billion
- Revenue rose 30.2% YoY to ₹46,639.04 million, driven by strong demand across key verticals
- EBIT margin contracted to 10% in Q2FY27 from 13.52% in Q1FY27 due to acquisition-related costs
- Persistent secured 94.04% stake in Nagarro SE via voluntary public takeover offer
*this image is generated using AI for illustrative purposes only.
Persistent Systems reported a consolidated net profit of ₹3,515.14 million for the quarter ended September 30, 2026 (Q2FY27), marking a 25.4% decline from the previous quarter's ₹4,830.43 million and missing analyst estimates of ₹5.57 billion.
The Pune-based IT services firm saw its bottom line contract sequentially as acquisition-related expenses weighed on margins. Revenue from operations climbed 30.2% year-on-year to ₹46,639.04 million, driven by strong demand across all key verticals. In USD terms, revenue stood at $487.6 million, reflecting 20.0% YoY growth and marking the company’s 26th sequential quarter of growth.
Financial Performance Highlights
The company’s standalone results also reflected this divergence between growth and profitability. Standalone net profit stood at ₹4,828.94 million for Q2FY27, up 5.2% YoY but down 20.1% QoQ. The consolidated EBIT margin compressed significantly due to one-time costs associated with the Nagarro SE acquisition.
| Metric | Q2FY27 | Q1FY27 | Q2FY26 | YoY Change | QoQ Change |
|---|---|---|---|---|---|
| Revenue (USD m) | $487.6 | - | - | +20.0% | +7.8% |
| Revenue (INR m) | ₹46,639.04 m | ₹43,032.27 m | ₹35,807.20 m | +30.2% | +8.4% |
| EBIT (INR m) | ₹4,700 m | ₹5,800 m | - | - | -18.9% |
| EBIT Margin (%) | 10.0% | 13.52% | - | - | -352 bps |
| Operating PAT (INR m) | ₹4,951.5 m | - | - | +5.0% | +2.5% |
| Net Profit (INR m) | ₹3,515.14 m | ₹4,830.43 m | ₹4,714.70 m | -25.4% | -27.2% |
| EPS (Basic) | ₹22.42 | ₹30.88 | ₹30.31 | -26.0% | -27.4% |
What the Numbers Show
A clear divergence exists between Persistent’s operational momentum and its reported profitability. While revenue grew 30.2% YoY in INR terms (20.0% in USD), profit before tax fell 26.5% YoY and 27.2% QoQ. This contraction is largely attributable to ₹1,853.41 million in acquisition-related expenses disclosed under "Other Expenses" in the consolidated results. These costs, primarily professional fees and legal advisory charges for the Nagarro SE deal, temporarily depressed margins. Excluding these non-recurring items, the underlying operating performance remains aligned with the strong revenue growth trajectory, as evidenced by the 5.0% YoY growth in Operating PAT. The sharp drop in EBIT margin to 10% from 13.52% in Q1FY27 highlights the immediate impact of these integration costs on operating leverage.
Segment Growth and Acquisition Updates
All three major business segments contributed to the revenue surge in Q2FY27:
- Software, Hi-Tech and Emerging Industries: Revenue rose to ₹19,943.86 million, up 39.2% YoY.
- Banking, Financial Services and Insurance (BFSI): Revenue increased to ₹15,714.77 million, up 26.2% YoY.
- Healthcare & Life Sciences: Revenue grew to ₹10,980.41 million, up 21.6% YoY.
Strategically, the company has moved forward with its expansion plans. As of October 6, 2026, Persistent secured approximately 94.04% of Nagarro SE through a voluntary public takeover offer. The Board also approved long-term debt financing of up to USD 1,250 million and equity raising of up to USD 450 million to fund these acquisitions and general corporate purposes.
Order Book and Client Wins
The order booking for the quarter ended September 30, 2026, was $633.5 million in Total Contract Value (TCV) and $481.0 million in Annual Contract Value (ACV). Key wins included modernizing legacy estates for a Fortune 500 US insurer using cloud-native platforms, and accelerating mainframe modernization through agentic AI ecosystems for a leading hyperscaler. The company also secured deals in Healthcare & Life Sciences focused on unifying fragmented IT operations and scaling data platforms with agentic AI.
Balance Sheet and Cash Flow
The company maintained a healthy cash position, with cash and cash equivalents standing at ₹16,311.85 million as of September 30, 2026, compared to ₹10,749.15 million at the end of FY26. Net cash generated from operating activities was ₹9,280.06 million for the six months ended September 30, 2026. Total assets expanded to ₹1,30,305.15 million, reflecting the consolidation of acquired entities and organic growth.
Historical Stock Returns for Persistent Systems
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| -0.98% | +6.05% | +5.87% | +8.60% | +9.41% | +177.30% |
How will the integration of Nagarro SE impact Persistent Systems' EBIT margin recovery trajectory in the next two quarters?
What is the expected timeline for the ₹1,853 million in one-time acquisition costs to fully normalize, and how might this affect future EPS guidance?
Given the $1.25 billion debt and $450 million equity raise, how will the increased leverage influence Persistent's capital allocation strategy and dividend policy?
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