Persistent Systems shares dipped by nearly 4% on Friday following a 25.44% year-on-year drop in the company's consolidated net profit in the July-September quarter of FY27. Persistent Systems shares fell by 3.60 percent to Rs 5,630, with the investors gauging the effects of acquisition-specific expenses and margin pressure, and mixed brokerage views.

Key highlights

• Persistent Systems Q2 FY27 profit decreased 25.44% YoY whereas the revenue increased 30.25% YoY.
• JPMorgan brought back an overweight rating, CLSA kept on its ‘buy' side, while Nomura gave a neutral outlook, and Citi kept a ‘sell' rating.

In Persistent Systems Q2 results, the consolidated net profit decreased to Rs 351.51 crore from Rs 471.47 crore in the same quarter of FY26. But the revenue from operations grew 30.25% YoY to Rs 4,663.9 crore from Rs 3,580.72 crore during Q2 FY26.

Net profit went down 27% sequentially, but up 8% year-on-year, and revenue increased 8% sequentially. The results prompted differing assessments from brokerages, with JPMorgan reinstating its overweight rating and CLSA retaining its buy recommendation. Nomura maintained a neutral stance, while Citi continued to recommend selling the stock.

Persistent Systems Q2 Results Acquisition Costs Weigh on Profit

Persistent Systems incurred Rs 185.34 crore in acquisition-related expenses linked to its acquisition of Germany-based Nagarro SE. The expenses were recorded under other expenses during the quarter. As of October 6, 2026, Persistent has acquired around 94.04% of Nagarro via its wholly owned subsidiary.

For the July-September quarter, the company had total contract value (TCV) of $633.5 million and annual contract value (ACV) of $481 million. But some analysts raised eyebrows over deal victories after a stellar fourth quarter. In addition, macroeconomic uncertainty, which resulted in delayed decision making by clients, impacted deal closures.

However, margins and adjusted earnings were not as strong as some of the brokerage estimates, as revenue continued to grow. The impact of acquisition-related costs and higher amortisation expenses also influenced analysts’ outlook for profitability.

JPMorgan on Persistent Systems Overweight Rating Reinstated

JPMorgan reinstated its overweight rating on Persistent Systems and set a target price of Rs 6,400. The brokerage described the quarterly performance as mixed, with revenue exceeding expectations but margins missing estimates.

Persistent recorded constant-currency revenue growth of 7.8% quarter-on-quarter, supported by the ramp-up of a large technology deal and vendor consolidation at a major banking, financial services and insurance (BFSI) client.

However, overall deal TCV increased only 4% year-on-year. Some deal closures were pushed into the December quarter as clients delayed decisions towards the end of September.

JPMorgan noted that EBITDA margin remained flat and was in line with expectations, while EBIT margin declined 100 basis points sequentially to 15%. Higher amortisation costs associated with products acquired as part of a large technology deal are expected to continue affecting margins.

The brokerage reduced its margin estimates by 40-60 basis points, leading to a 2-4% cut in adjusted earnings per share estimates.

CLSA Retains Buy Rating on Persistent Systems

CLSA maintained its buy rating but marginally reduced its target price to Rs 6,488 from Rs 6,514. It said revenue was 2% above consensus estimates, while EBIT and adjusted profit after tax were 2% and 12% below expectations, respectively.

Higher interest expenses, attributed to increased current liabilities, and foreign exchange losses contributed to the earnings shortfall. CLSA cut its earnings per share forecasts for FY27-29 by 6-9%, but continued to project compound annual growth rates of 16% in revenue, 19% in EBIT and 22% in earnings per share over the period.

The brokerage has not incorporated Nagarro into its estimates. However, it believes Persistent could potentially reach $5 billion in revenue by FY31 following integration.

Nomura Maintains Neutral Rating on Persistent Systems

Nomura retained its neutral rating but raised its target price to Rs 5,600 from Rs 5,330. The brokerage said revenue was in line with expectations, although margins fell significantly short and deal wins softened after a strong first quarter.

Nomura expects margins to remain under pressure in FY27 as the company executes large deals. It also noted that the Nagarro acquisition was expected to close over the next one to two quarters, according to management.

The brokerage lowered its FY27 earnings per share forecast by 22% but raised its FY28 forecast by 3%. It also noted that the stock was trading at 30 times its estimated FY28 earnings per share.

Citi Maintains Sell Rating and Cuts Target Price

Citi retained its sell rating on Persistent Systems and reduced its target price to Rs 4,570 from Rs 4,650. The brokerage noted that constant-currency revenue growth of 7.8% quarter-on-quarter exceeded its estimate of 7.5%, but the 15% EBIT margin was below its 16% forecast.

Citi highlighted approximately Rs 1,000 crore in intangible assets associated with the large technology deal and flagged concerns about segmental margin performance. It also noted that trailing 12-month ACV rose 22% year-on-year and headcount increased 13%.

Despite these growth indicators, the brokerage pointed to slower client decision-making in recent weeks. It reduced its FY27 and FY28 earnings estimates by 1-2%.

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Persistent Systems Share Price and Market Performance

Persistent Systems' market cap at the mentioned share price was Rs 88,844.80 crore. A comparison of the stock with the Nifty IT index on longer time frames also shows that it has been underperforming.

Persistent Systems has fallen 10.31% year to date as compared with a 17.21% drop in the index. The stock lost 3.54% in 1 year period as compared with Nifty IT's 11.06% loss during the same period.

The brokerage views remain divided, reflecting the balance between Persistent Systems’ strong revenue growth and concerns over margins, acquisition costs and deal momentum. Investors will be watching subsequent quarterly results and the integration of Nagarro for further signs of how these factors affect earnings.