Persistent Q1: revenue +29% YoY, but margin squeeze caps consolidated PAT growth at 14%

Persistent Systems opened FY27 with strong topline momentum but a visibly softer profit print. Consolidated revenue rose to ₹4,303 Cr, up 29.1% YoY and 6.1% QoQ, with all three verticals growing ~29% YoY (BFSI ₹1,463 Cr, Software/Hi-Tech ₹1,749 Cr, Healthcare ₹1,091 Cr). At roughly a ~$2.0B annualised run-rate, revenue keeps management's $2 billion FY27 aspiration on track. But consolidated PAT was ₹483 Cr — up only 13.7% YoY and down 8.7% QoQ from ₹529 Cr — with EPS at ₹30.88 versus ₹33.83 last quarter. Profit growth lagging revenue growth by ~15 points is the story of the quarter. The gap is margin compression. Operating margin (EBITDA) fell to ~16.2% from 18.9% in Q4 and 18.4% a year ago; net margin slipped to 11.2% from ~12.9%/12.5%. The squeeze sits on two lines: other expenses jumped to ₹740 Cr (+40% QoQ, +78% YoY, far outpacing the 6% sequential revenue rise) and finance costs rose to ₹29 Cr (+56% QoQ). Both are consistent with the Nagarro SE acquisition machinery now running through the P&L — the board approved a EUR 1,540M corporate guarantee and a EUR 1,400M Barclays bridge facility — yet none of it is flagged as exceptional, so the drag is fully reported. The prior concall had guided margin EXPANSION on SASVA/iAURA productivity; this quarter delivered the opposite, a clear miss against that framing. The effective tax rate of 22.5% did land inside the guided 20-24% band. Against the bar we set pre-result (EBIT margin ~15-16%), the print falls short — implied EBIT margin is ~13.5%. No firm Street consensus was published for Q1 FY27; revenue topped the illustrative ₹4,150-4,300 Cr range analysts sketched, but the profitability miss is the disappointment. On our flagged watch items: the revenue/deal trajectory held up, but the Nagarro debt-and-financing concern is already materialising in the finance-cost line and the leverage that the ICRA 1.3x trigger flags. Concise Systems OÜ closed July 1 (no Q1 impact). Standalone PAT was ₹402 Cr (+9.5% YoY). The board also confirmed a ₹18/share final dividend for FY26.