Persistent Systems slumps as investors assess Nagarro acquisition

Persistent Systems tumbled 7.75% to Rs 4,466.50 as investors reacted to the company's proposed acquisition of German digital engineering firm Nagarro SE.

The proposed acquisition is expected to significantly expand Persistent's global footprint and AI-led digital engineering capabilities. However, investors remained cautious over the execution of the large cross-border transaction.

Persistent has signed an agreement to combine with Munich-headquartered Nagarro and has acquired an approximately 21% stake in the company. It has also launched a voluntary public takeover offer for the remaining shares, subject to regulatory approvals and shareholder acceptance.

According to the investor FAQ released by the company, the combined entity would become the world's second-largest digital engineering company by revenue and India's seventh-largest technology services company, with an annualised revenue run rate of more than $2.9 billion. The combined group would employ more than 46,000 people and serve over 350 marquee clients globally.

Persistent said the transaction is expected to be earnings per share (EPS) accretive. On an illustrative pro-forma trailing 12-month basis, the combined business would generate revenue of $2.795 billion, EBITDA of $463 million, EBIT of $337 million and profit after tax of $215 million. Pro-forma EPS is estimated at $1.36 (Rs 127), compared with $1.30 (Rs 121) for Persistent on a standalone basis. The company stressed that these figures are illustrative and not management guidance.

The company said Nagarro is a highly complementary business that strengthens Persistent's presence in Europe while adding complementary industry verticals, AI expertise, and ERP and customer experience capabilities. It said the combination would create a global AI-led digital engineering company and achieve a scale that would have taken years to build organically.

Persistent said the all-cash offer values Nagarro at EUR 81 per share, representing a premium of about 140% to Nagarro's undisturbed closing price on 25 June 2026 and about 94% to its three-month volume-weighted average price.

Nagarro's management board and supervisory board have backed the transaction and intend to recommend that shareholders accept the offer. Persistent has already secured an approximately 21% stake through a binding agreement with Nagarro's largest shareholder.

The acquisition is expected to close by Q4 CY26 or Q1 CY27, subject to German and Indian regulatory approvals and the acceptance of the offer by shareholders holding at least 50% plus one share of all outstanding Nagarro shares. Until then, Persistent and Nagarro will continue to operate as independent companies.

Persistent Systems is a global services and solutions company delivering AI-led, platform-driven digital engineering and enterprise modernization to businesses across industries.

Persistent Systems reported a 20.43% sequential increase in consolidated net profit to Rs 529.26 crore in Q4 FY26, compared with Rs 439.45 crore in Q3 FY26. Revenue from operations increased 7.35% quarter-on-quarter to Rs 4,055.94 crore for the quarter ended 31 March 2026.

On a year-on-year basis, the company?s net profit rose 33.73%, while revenue grew 25.10% in Q4 FY26.

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