Persistent Systems Q2 FY27: Revenue up 20%, margins fall

What moved the stock on 23 October 2026

Persistent Systems Ltd shares slipped about 5% even as the company reported strong revenue growth for Q2 FY27. The stock was referenced at ₹5,727.50 on the NSE in the results-related coverage shared alongside quarterly updates. The market reaction reflected a gap between top-line momentum and profitability metrics that tightened during the quarter. Management commentary also kept attention on the ongoing Nagarro acquisition and its near-term cost impact.

The results cover the second quarter ended September 30, 2026. The company hosted its Q2 FY27 earnings call on October 15, 2026, with an audio recording, video recording, and transcript made available. The call included participation from the chairman and managing director Dr. Anand Deshpande, CEO Sandeep Kalra, CFO Vinit Teredesai, CTO Nitish Shrivastava, and finance and strategy leader Saurabh Dwivedi.

Q2 FY27 revenue: 26th straight sequential growth quarter

Persistent said it delivered revenue of ₹4,663.9 crore in Q2 FY27, which it also reported as US$487.6 million. Revenue grew 20% year-on-year and 8.4% quarter-on-quarter in rupee terms. In constant currency terms, the company reported 7.8% quarter-on-quarter growth and 20.8% year-on-year growth.

Management highlighted that the quarter marked the 26th consecutive quarter of sequential revenue growth. In the earnings-call commentary, the company linked performance to business execution during the quarter and referenced deal activity that supported growth. The company also flagged that it would discuss the Nagarro acquisition progress and AI capability expansion as part of the call agenda.

Profitability: EBIT margin at 15% after a YoY decline

Persistent’s EBIT margin for Q2 FY27 came in at 15%. This represented a 130 basis point decline year-on-year, with management attributing the pressure to wage hikes, lower utilization, and higher amortization related to a large deal.

EBIT for the quarter was ₹697.7 crore, translating to 19.5% year-on-year growth. The company also cited EBIT growth of 1.6% quarter-on-quarter alongside the 15% margin. While revenue growth remained strong, the margin commentary became a focal point for investors because it explained why profit growth did not keep pace with the top line.

PAT split: operating versus reported profit after acquisition costs

Persistent provided two lenses on profit after tax. Operating profit after tax for Q2 FY27 was ₹495.2 crore, with a margin of 10.6% and year-on-year growth of 5%. It also cited operating PAT growth of 2.5% quarter-on-quarter.

Reported profit after tax was lower at ₹351.5 crore, with a margin of 7.5% and a year-on-year decline of 25.4%. Management said the reported PAT included exceptional one-time expenses linked to the Nagarro acquisition, and that these expenses had an impact of about 3.1% for the quarter on reported PAT margin and reported EPS.

Nagarro acquisition: transaction costs and expected timeline

The company disclosed that it incurred transaction costs of ₹185.3 crore toward the Nagarro acquisition during Q2 FY27. Management also said it expects an incremental US$25-30 million of transaction-related costs over the next two quarters.

On timeline, the company said it expects the deal closure by Q4 calendar year 2026 or Q1 calendar year 2027. The acquisition-related line items mattered in this quarter because they directly reduced reported profitability and were explicitly called out as a driver of the reported PAT decline.

Order book snapshot: TCV and new bookings for the quarter

Persistent said the total contract value (TCV) for the quarter stood at US$633.5 million. Within this, TCV of new bookings was US$367.1 million.

These order metrics were discussed alongside the quarterly performance as a demand indicator. However, the immediate market focus remained on the profitability bridge and how near-term costs, including transaction expenses, were flowing through to reported earnings.

Key numbers table (Q2 FY27)

Market impact: why the share price reacted despite growth

The reported 5% fall in Persistent Systems shares, despite 7.8% sequential constant-currency revenue growth, underscored the market’s sensitivity to margins and reported earnings. The company’s EBIT margin fell to 15%, and management cited specific operational drivers, including wage hikes, lower utilization, and higher amortization tied to a large deal.

The sharp contrast between operating PAT (₹495.2 crore) and reported PAT (₹351.5 crore) also shaped sentiment. Management’s disclosure that Q2 included ₹185.3 crore of Nagarro transaction costs, and that additional costs of US$25-30 million are expected over the next two quarters, gave investors a clear near-term earnings overhang to factor into valuations.

Why this quarter matters for tracking FY27

Q2 FY27 kept Persistent’s long sequential growth streak intact, extending it to 26 straight quarters. At the same time, it showed that profitability can compress even in a growth quarter when wage actions, utilization, and deal-related amortization move against the company. The quarter also made the Nagarro acquisition a central variable for near-term reported earnings, due to the exceptional cost impact described by management.

The next milestones flagged by the company include continued transaction-related spending over the next two quarters and the targeted deal closure window of Q4 CY 2026 or Q1 CY 2027. Investors will likely track how margins evolve from the 15% EBIT level and how the gap between operating and reported PAT changes as acquisition costs progress.