Persistent Systems Ltd. announces an acquisition

The disclosed acquisition consideration is approximately EUR 1.27 billion, payable in cash at EUR 81 per Nagarro share. Persistent had already secured approximately 21% of Nagarro, but the incremental cash required to acquire the remaining shares was not separately disclosed. ^[1]

Funding mix disclosed

• Debt: A EUR 1.4 billion bridge loan from Barclays was disclosed as the transaction financing. ^[2]
• Equity: Persistent sought shareholder approval for an equity raise of up to USD 450 million. The disclosed structure capped combined equity and borrowings at USD 1.25 billion. ^[3]
• Use of excess debt capacity: The disclosed financing commentary said the excess from the EUR 1.4 billion facility would be used for refinancing; one report quantified this as approximately USD 300 million. ^[4]

The key distinction is that EUR 1.4 billion is the committed bridge facility, not necessarily the final amount drawn, while the USD 450 million is a maximum proposed equity raise, not confirmed equity actually issued. The final utilized debt-equity split was therefore not yet disclosed.

Q1 FY27 balance-sheet impact

There was no Nagarro financing impact in the reported Q1 FY27 consolidated balance sheet. Persistent reported:

• Cash and equivalents: Rs 1,074.9 Crores ^[5]
• Total debt: Rs 0 Crores ^[6]
• Net debt: negative Rs 1,074.9 Crores, i.e. net cash of Rs 1,074.9 Crores ^[7]

Thus, the Q1 FY27 balance sheet remains a pre-transaction net-cash position. The acquisition was expected to close only in Q4 CY26 or Q1 CY27, after the June 30, 2026 reporting date. ^[3] Once financing is drawn and the transaction closes, the company’s net cash would mechanically reduce and could turn into net debt, but the eventual INR impact cannot be quantified from the disclosed information because the final debt draw, equity issuance, closing cash balance, and EUR/INR conversion are not reported.

Nagarro would represent approximately 38% of the combined revenue run-rate. Persistent reported Q1 FY27 revenue of USD 452.4 million ^[8]; annualized, that is approximately USD 1.81 billion. Against the stated combined revenue run-rate of approximately USD 2.9 billion ^[9], the implied Nagarro contribution is roughly USD 1.09 billion, or 37.6% of pro-forma revenue.

Pro-forma vertical mix

Persistent’s standalone Software, Hi-Tech & Emerging Industries vertical accounted for 39.8% of Q1 FY27 revenue ^[10]. Nagarro’s closest reported equivalents—Horizontal Tech at 5.1% and TMT at 4.5%—total 9.6% of its revenue mix ^[10].

Using those categories as a directional proxy:

• Persistent Software/Hi-Tech revenue: approximately USD 720 million, based on its annualized Q1 revenue.
• Nagarro tech/TMT revenue: approximately USD 105 million, based on the implied Nagarro run-rate.
• Combined Software/Hi-Tech-related revenue: approximately USD 825 million.
• Pro-forma share: approximately 28.4% of the USD 2.9 billion combined run-rate.

Notes: † Derived using Persistent’s Q1 FY27 annualized revenue, the implied Nagarro revenue residual, and Nagarro’s Horizontal Tech plus TMT categories. Nagarro’s vertical definitions are not identical to Persistent’s, so this is a directional pro-forma bridge rather than a company-reported consolidated mix.

Implication: the acquisition materially reduces Persistent’s dependence on its historical Software/Hi-Tech concentration. Nagarro adds substantial exposure to industrial and automotive, retail and CPG, travel and logistics, public sector, energy, financial services and healthcare, rather than simply adding more of Persistent’s existing core verticals ^[10]. The diversification is therefore meaningful at the revenue level, although the pro-forma figures remain a run-rate construct until the transaction closes and the businesses are reported on a common basis; completion remains subject to outstanding approvals and conditions ^[11].

There is no like-for-like Q1 FY27 EBIT margin reported for Nagarro. Persistent’s Q1 FY27 presentation reports a 16.0% EBIT margin for Persistent, while its Q1 FY27 standalone operating margin was 13.9%, implying a 2.1 percentage-point spread—but the presentation’s EBIT measure is a non-GAAP metric and should not be treated as a directly comparable standalone statutory margin. ^{[8] [12] [11]}

The only Nagarro profitability figure disclosed is CY2025 adjusted EBITDA margin of 13.8%, so it cannot be used as a Q1 FY27 EBIT comparison. The transaction timeline also placed closing in Q4 CY26 or Q1 CY27, meaning Nagarro was not yet a Q1 FY27 reported consolidated operating component on the cited timeline. ^[3] Thus, the defensible comparison is: Nagarro’s disclosed CY2025 adjusted EBITDA margin was broadly similar to Persistent’s Q1 FY27 standalone operating margin, but the metrics and periods differ.

Acquisition-related costs: no cited financial-statement note identifies a specific charge for:

• purchase-price-allocation or acquired-intangible amortization;
• transaction or advisory fees;
• integration costs;
• retention, severance, restructuring, or migration expenses.

The presentation only provides a general warning that EBIT, EBITDA and adjusted measures are non-GAAP and may not be comparable with third-party measures; it does not quantify Nagarro-related amortization or integration costs. ^[11] Therefore, no Q1 FY27 acquisition-cost amount should be attributed to Persistent without the detailed notes to the financial statements.

_Scope note: this comparison also included Coforge Ltd. (COFORGE); MphasiS Ltd. (MPHASIS); Hexaware Technologies Ltd (HEXT); Tata Elxsi Ltd. (TATAELXSI); Tech Mahindra Ltd. (TECHM), which the answer above does not cover. Ask about any of them for a full side-by-side._