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EconomyCompanies

Persistent's revenue grows 20% but Nagarro deal costs cut profit by a quarter

The Pune company reported its 26th straight quarter of revenue growth. Reported profit fell 25.4% as it worked towards closing its purchase of IT services company Nagarro.

From the editorial desk · PunePublished
Persistent Systems chief executive Sandeep Kalra (file photo)
Persistent Systems chief executive Sandeep Kalra (file photo)Photo: Ranjeetpandey2 / Wikimedia Commons, CC0 and Public domain

Key points

  1. Dollar revenue rose 20% from a year earlier to $487.6 million.
  2. Net profit fell 25.4% to ₹351.5 crore, while operating profit rose 19.5%.
  3. Persistent has secured about 94.04% of Nagarro's share capital and voting rights.

Persistent Systems grew revenue by a fifth in the July to September quarter, but its reported profit fell sharply as costs linked to its acquisition of IT services company Nagarro weighed on the books.

Revenue in dollar terms rose 20% from a year earlier to $487.6 million, and was up 7.8% from the June quarter, the Pune company said on Thursday evening after the market closed. In constant currency, growth was 20.8% on the year. In rupees, revenue rose 30.3% to ₹4,663.9 crore.

“We are pleased to report Q2 FY27 revenue of USD 487.6M, marking our 26th sequential quarter of growth,” said Sandeep Kalra, chief executive and executive director.

Profit takes the hit

Net profit fell 25.4% from a year earlier to ₹351.5 crore, and was 27.2% lower than in the June quarter. Expenses related to the Nagarro acquisition came to ₹185.34 crore.

The underlying business did better. Operating profit (EBIT) rose 19.5% to ₹697.7 crore, for a margin of 15%. Operating profit after tax, which the company reports separately, rose 5% to ₹495.2 crore.

New orders had a total contract value of $633.5 million, with an annual contract value of $481 million.

Nagarro deal

Persistent said it had secured about 94.04% of Nagarro’s share capital and voting rights, excluding treasury shares. Its shareholders have approved raising up to $450 million in equity, with total equity and borrowings for the deal capped at $1.25 billion.

“We value the confidence shown by our shareholders and financing partners as we work towards closing,” Kalra said. The company did not give a date for completing the purchase.

Persistent’s shares closed 0.98% lower at ₹5,840 on the NSE on Thursday, before the results were out.

The documents