Persistent Q1: Strong ops, Nagarro merger, deal discount

Persistent Systems reported Q1 FY27 results in July with revenue up 29 percent and net profit up 13.7 percent, powered by record contract value wins. The company announced a Business Combination with Nagarro to create a $2.9 billion AI platform, closing Q4 CY26. The stock fell 10 to 11 percent on deal concerns despite strong operations. Q1 FY27 snapshot: Revenue: Rs 4,303 crore, up 29 percent YoY; USD 452.4 million, up 16.1 percent Net profit: Rs 483 crore, up 13.7 percent YoY EBIT up 32.7 percent YoY Record Total Contract Value: USD 1.15 billion, including USD 650 million+ strategic deal Segments: Software/Hi-Tech 40.7% (+15.7%); BFSI 34% (+16.3%); Healthcare 25.3% (+16.4%) Geography: North America 79.1%, India 9.8%, Europe 8.5% Persistent Systems [][***** is an AI-led digital engineering company serving enterprise clients. The Nagarro merger creates a combined $2.9 billion annual revenue entity, closing Q4 CY26 or Q1 CY27. Q1 delivery was exceptional — revenue +29 percent, record TCV, mega deals, EBIT up 33 percent. Yet the Nagarro deal triggered a 10 to 11 percent correction as investors priced dilution and integration risk. The deal transforms Persistent into a global AI platform, but at near-term stock cost. My view: Persistent's core business is firing. Nagarro is strategically sound; integrating 28,000+ employees is execution risk, not deal logic. At current discount, accumulate for deal close. Entry Rs 5,000 to 5,300; validations above Rs 5,500; break Rs 4,800 and thesis fails. Watch Q2 guidance and deal updates. Disclosure: Vijay Kumar Gupta, SEBI Registered Research Analyst, INH000020226, Vijay Gupta Advisory. SEBI registration and NISM certification do not guarantee performance or assure returns. Securities markets are subject to market risks. No holdings in the subject company.