Persistent Systems shares dropped 6% on October 16 after the company reported mixed results for the second quarter of fiscal year 2027. While revenue grew, profits and margins fell short of expectations, raising concerns among investors about the company's near-term performance.
- Persistent Systems’ consolidated net profit fell 27.2% sequentially to ₹352 crore in Q2 FY27.
- Revenue from core operations increased 8.3% year-on-year to ₹4,664 crore.
- Margins declined due to higher expenses, including exceptional costs related to a proposed acquisition.
- Order book stood at $633.5 million in Total Contract Value as of September 30, 2026.
- Analysts expect margin pressures to continue amid slower client decision-making.
Why did Persistent Systems shares drop 6%?
Shares of Persistent Systems fell about 6% during trading on October 16, hitting an intraday low of ₹5,492. The decline followed the company’s announcement of a 27.2% sequential drop in consolidated net profit to ₹352 crore for the second quarter of FY27. Investors reacted to the profit decline and margins missing market estimates.
The company attributed the profit fall mainly to a ₹185.34 crore exceptional expense related to its proposed acquisition of Nagarro. Additionally, overall expenses rose by 13% in the quarter, impacting profitability.
How did Persistent Systems perform financially in Q2 FY27?
Persistent Systems reported revenue from core operations of ₹4,664 crore in Q2 FY27, up 8.3% from ₹4,303 crore in the same quarter last year. Despite this revenue growth, consolidated profits declined due to increased expenses and exceptional charges.
EBIT margins contracted to 15% from 16% in the previous quarter. Analysts noted that higher amortisation costs related to large technology deals contributed to margin pressure. Interest expenses and foreign exchange losses also increased.
What are analysts saying about Persistent Systems’ outlook?
Analysts from JPMorgan and Nomura highlighted that while revenue growth met expectations, margins fell short. They expect margin pressures to persist in FY27 due to ongoing costs from large deal executions and slower client decision-making.
JPMorgan analysts forecast margin cuts of 40 to 60 basis points and a 2-4% reduction in adjusted earnings per share. Nomura also anticipates margin challenges linked to the execution of large contracts.
What is the status of Persistent Systems’ order book?
As of September 30, 2026, Persistent Systems reported a Total Contract Value (TCV) of $633.5 million and an Annual Contract Value (ACV) of $481.0 million. However, the year-on-year growth in deal TCV was soft at 4%, with some deal closures delayed into the third quarter due to slower client decisions amid macroeconomic uncertainty.
What is Persistent Systems’ growth outlook?
Despite the challenges, Persistent Systems remains confident about its growth prospects. The company expects support from recent deal wins and a healthy pipeline of opportunities. Investors will closely watch upcoming quarters for signs of margin recovery and sustained revenue growth.
