Persistent Q2 FY27: PAT -25% YoY (adj +5%) as OPM slips to 13.6% on Nagarro deal costs

Persistent Systems' consolidated revenue for the quarter ended September 30, 2026 (Q2 FY27) came in at ₹4,663.9 Cr, up 30.3% YoY and 8.4% QoQ — well above the pre-result preview's ₹4,650-4,850 Cr expected range and the Street's flagged 15-17% YoY growth band (~$560-580M). But consolidated PAT fell to ₹351.5 Cr, down 25.4% YoY and 27.2% QoQ, missing the margin-hold narrative the Street was pricing in. Consolidated basic EPS was ₹22.42 against ₹30.31 a year ago and ₹30.88 last quarter. The gap is driven almost entirely by costs tied to the Nagarro SE acquisition: consolidated 'Other expenses' rose to ₹934.6 Cr from ₹414.1 Cr a year ago, including roughly ₹185.3 Cr of acquisition-related fees (note 9d) sitting at the Group/BidCo level, plus a ~₹24 Cr net loss from subsidiaries before consolidation adjustments. Consolidated OPM compressed to 13.6% from 19.1% YoY and 16.2% QoQ; NPM fell to 7.5% from 13.0% YoY. Standalone tells a materially different story (>3% divergence): standalone PAT rose 5.2% YoY to ₹482.9 Cr, because the deal costs and subsidiary losses sit outside the standalone entity. Adjusting consolidated PAT for the ~₹185.3 Cr pre-tax deal-cost add-back (~₹143.6 Cr post-tax at the quarter's 22.5% effective rate) yields underlying consolidated PAT growth of roughly +5% YoY — closely matching the standalone print — so the headline -25% decline is largely a one-off consolidation/deal-cost effect, not core operating collapse. Even so, standalone NPM also slipped to 10.7% from 13.0% YoY, consistent with the wage-hike headwind our pre-result preview flagged, and employee/subcontracting costs grew faster than revenue (+22.4% and +32.8% YoY respectively) — so some genuine margin erosion sits beneath the one-off. Against management's only quantifiable guidance on record — an FY26 effective tax rate of 20-24% — the quarter's 22.5% consolidated rate stayed on track; the longer-term $2B-by-FY27 / $5B-by-FY31 aspiration isn't quantified for this specific quarter, with H1 FY27 consolidated revenue at ₹8,967 Cr ahead of any Nagarro contribution. The quarter's corporate developments reinforce the transition underway: the Nagarro takeover concluded October 6, 2026 with Persistent securing 94.04% of shares (after this quarter's cutoff, so consolidation starts H2), a new Hyderabad delivery facility opened October 13, and the Chief Delivery Officer resigned October 9 — a leadership change landing just as Nagarro integration begins. No management press-release commentary on this print was available in our records, so this read is drawn solely from the audited financial statements and notes.