Persistent Systems has approved plans to raise ₹9,000 crore through debt instruments to finance its acquisition of Germany-based technology services company Nagarro SE. The Pune-headquartered IT services provider plans to raise ₹8,000 crore through non-convertible debentures (NCDs) and another ₹1,000 crore through commercial papers (CPs). The fundraising comes as Persistent moves closer to completing the acquisition, having secured approximately 94.04% of Nagarro’s share capital and voting rights, excluding treasury shares.
The financing announcement follows a mixed second-quarter performance for fiscal 2027. Persistent Systems reported consolidated net profit of ₹351.51 crore, down 25.4% year-on-year, even as revenue increased 30.3% to ₹4,663.9 crore. A one-time expense of ₹185.34 crore related to the Nagarro transaction weighed on reported earnings. Operating profit after tax, which excludes certain items, rose 5% to ₹495.15 crore. The developments highlight Persistent’s strategy of expanding through acquisitions while managing the financial costs of building a larger international technology-services business.
Key Takeaways
- Debt fundraising: Persistent Systems has approved ₹9,000 crore in debt instruments to support financing related to the Nagarro acquisition.
- NCD issue: ₹8,000 crore is planned through privately placed non-convertible debentures.
- Commercial papers: The company has approved ₹1,000 crore in commercial papers with a one-year tenure.
- Q2 profit: Consolidated net profit declined 25.4% year-on-year to ₹351.51 crore.
- Revenue growth: Revenue from operations increased 30.3% to ₹4,663.9 crore.
- Acquisition progress: Persistent secured approximately 94.04% of Nagarro’s share capital and voting rights, excluding treasury shares.
- Transaction costs: A ₹185.34 crore expense associated with the acquisition significantly affected reported profitability.
Persistent Systems Approves ₹9,000 Crore Debt Plan
Persistent Systems’ board has approved a fundraising plan comprising two debt instruments: non-convertible debentures and commercial papers. The company intends to use the financing as part of its longer-term funding arrangements for the Nagarro transaction.
According to the reported plan, the NCD issue will account for ₹8,000 crore, while commercial papers will contribute ₹1,000 crore. Both instruments are intended to be privately placed and listed on the National Stock Exchange, subject to the applicable issue procedures.
| Debt instrument | Planned amount | Key details |
|---|---|---|
| Non-convertible debentures | ₹8,000 crore | Private placement; planned NSE listing |
| Commercial papers | ₹1,000 crore | Private placement; one-year tenure |
| Total | ₹9,000 crore | Acquisition-related financing |
Source: Persistent Systems’ reported board approvals and regulatory disclosures. The figures describe the approved fundraising plan, not confirmation that the entire amount has already been raised.
The structure combines longer-term debt securities with a shorter-term borrowing instrument. NCDs allow a company to raise funds from investors without issuing additional equity, while commercial papers are short-term debt instruments used by eligible companies to meet financing requirements.
The precise interest expense and repayment schedule will depend on the terms of the securities, market conditions and the final issuance details. The planned debt raise should therefore be distinguished from the actual amount ultimately issued and the cost at which the company secures the funds.
Why Persistent Systems Needs the Funding
The fundraising is linked to Persistent’s proposed acquisition of Nagarro, an international IT services and digital engineering company headquartered in Germany.
Persistent has already secured approximately 94.04% of Nagarro’s share capital and voting rights, excluding treasury shares, following its takeover offer. The company intends to acquire the remaining minority interests after the transaction closes, subject to the applicable procedures.
The total funding requirement to acquire 100% of Nagarro is estimated at approximately $1.25 billion. Persistent’s financing strategy has evolved to include both debt and equity rather than relying entirely on borrowings.
The company has received shareholder approval to raise up to $450 million through equity, with combined equity and borrowings capped at $1.25 billion, according to its acquisition disclosures. The proposed ₹9,000 crore debt plan is part of the broader funding arrangements.
Reuters reported that the rupee-denominated bond proceeds are intended to refinance a bridge loan Persistent took earlier in 2026 to finance the acquisition. A bridge loan provides temporary funding while a company arranges longer-term financing.
This approach can help a company move ahead with a transaction before all permanent funding is in place. However, refinancing the bridge loan does not remove the acquisition’s overall cost. It replaces one funding arrangement with another and establishes new interest and repayment obligations.
Nagarro Acquisition: What Persistent Is Buying
Nagarro provides technology consulting, software engineering and digital product development services to clients across industries. Its capabilities complement Persistent’s existing work in digital engineering, enterprise modernisation, data analytics, cloud computing and artificial intelligence-led services.
Persistent has said the combination is intended to strengthen its engineering capabilities, expand its geographical presence and increase its global delivery capacity.
The acquisition could broaden Persistent’s access to international clients and provide additional opportunities to cross-sell services. A larger combined business could also serve customers that need more extensive technology transformation programmes across multiple markets.
However, these benefits are not automatic. Technology-services acquisitions require the buyer to retain customers, integrate delivery processes, align management structures and maintain employee engagement. Differences in corporate culture, pricing models and regional operations can make integration complex.
Persistent has indicated that it intends to acquire the remaining minority shares after closing. The transaction’s completion remains subject to the outstanding regulatory approvals and applicable closing requirements.
The company said the deal was expected to close by the end of the first quarter of calendar year 2027, subject to those conditions. Until closing, the two businesses must continue to operate within the applicable legal and regulatory framework governing the transaction.
Persistent Systems Q2 FY27 Results: Revenue Rises, Profit Falls
Persistent Systems’ September-quarter results show a clear divergence between revenue growth and reported net profit.
Revenue from operations increased to ₹4,663.9 crore in Q2 FY27 from approximately ₹3,580 crore in the corresponding quarter a year earlier. The increase reflects continued demand for the company’s technology services and its 26th consecutive quarter of sequential revenue growth.
Reported net profit, however, declined to ₹351.51 crore from ₹471 crore in Q2 FY26.
| Financial metric | Q2 FY27 | Year-on-year change |
|---|---|---|
| Revenue from operations | ₹4,663.9 crore | +30.3% |
| Reported net profit | ₹351.51 crore | -25.4% |
| Operating profit after tax | ₹495.15 crore | +5.0% |
| EBIT margin | 15.0% | Lower than the year-ago period |
Source: Persistent Systems’ Q2 FY27 financial results. Figures are rounded where appropriate.
The reported profit decline was substantially affected by the Nagarro transaction. Persistent recorded ₹185.34 crore in acquisition-related costs, including expenses associated with transaction advisory services, regulatory filings, financing and legal work.
These costs reduced the profit reported under the company’s financial statements. Excluding certain items, operating profit after tax increased 5% year-on-year, showing that the underlying operating performance was stronger than the headline net-profit figure suggests.
Nevertheless, the adjusted measure should not be treated as a substitute for reported profit. Acquisition-related expenses are real costs, and additional transaction expenses may arise as the deal progresses.
How the Nagarro Deal Is Affecting Margins
Persistent’s EBIT margin stood at 15% in the September quarter. The company has faced pressure from wage increases, lower utilisation and acquisition-related effects, including amortisation and transaction expenses.
The margin matters because revenue growth does not always translate into proportionate profit growth. An IT services company must manage employee costs, subcontracting, project delivery, sales expenses and investments in new capabilities.
When revenue grows quickly, the company may need to hire employees, expand delivery capacity or invest in new markets. If those costs rise faster than revenue, margins can narrow even when the business is winning more work.
Persistent’s management has indicated an aspiration to improve margins toward a 16%–17% range. Achieving that objective will depend on utilisation, pricing, employee productivity, the mix of services delivered and the costs of integrating Nagarro.
The company also expects additional transaction expenses over the next two quarters. That means reported earnings may remain affected while acquisition work continues, even if revenue performance remains strong.
Investors will therefore need to examine both the growth of the combined business and the costs incurred to achieve it.
What the Debt Raise Means for Persistent’s Balance Sheet
Debt financing allows Persistent to fund a major acquisition without issuing all the required capital as new equity. This can help existing shareholders avoid some dilution, but it increases the company’s financial obligations.
The company will need to pay interest on the debt and meet repayment requirements under the relevant terms. If the acquired business does not generate the expected cash flow, the additional debt could put pressure on financial flexibility.
The planned use of commercial papers also makes the maturity profile important. Commercial papers typically have shorter tenures than longer-term bonds, so the company will need to manage repayment or refinancing at maturity.
NCDs can provide longer-term funding, depending on their final maturity structure. Reuters reported that Persistent was considering rupee-denominated bonds with maturities ranging from one to five years as part of its wider financing strategy.
Credit-rating agency ICRA assigned an AA-plus rating to the planned bonds, according to Reuters. A credit rating provides an assessment of credit risk under the agency’s methodology, but it does not guarantee repayment or eliminate the possibility of financial pressure.
For investors, the important questions include the final cost of borrowing, the debt repayment schedule, the cash flow generated by Nagarro and the pace at which Persistent can integrate the acquired business.
The Strategic Opportunity for Persistent Systems
The acquisition could give Persistent a larger international footprint and a broader range of technology-services capabilities. Nagarro’s presence across markets could complement Persistent’s existing customer relationships and expand its delivery network.
The combination also comes at a time when businesses are investing in AI, cloud migration, digital engineering and enterprise modernisation. IT services providers are seeking to combine technical expertise with the ability to deliver large, complex transformation programmes.
Persistent has been developing AI-related services and platforms alongside its core engineering business. The Nagarro transaction could add scale and customer reach, although the financial benefits will depend on successful execution.
The company will need to demonstrate that the acquisition generates sustainable growth rather than simply increasing its revenue base. Retaining key employees, keeping customers, managing costs and converting cross-selling opportunities into contracts will be critical.
The next several quarters will provide evidence of whether the enlarged business can generate enough operating cash flow to justify the acquisition price and financing commitments.
The Bigger Picture
Persistent Systems’ ₹9,000 crore debt plan highlights the financing demands of large acquisitions in India’s technology-services industry. The company is seeking to expand its scale and international capabilities through Nagarro, while using a combination of debt and equity to fund the transaction. Its strong revenue growth indicates continued business momentum, but the decline in reported profit demonstrates how acquisition expenses can weigh on near-term financial results.
The longer-term outcome will depend on integration, customer retention, margin recovery and the cash flow generated by the acquired business. Borrowing can make a transaction possible without issuing all the required equity, but it also increases repayment obligations. Persistent will need to show that Nagarro’s contribution to revenue and profitability can support those commitments over time.
Looking Ahead
Persistent’s immediate priorities are to complete the remaining Nagarro acquisition requirements, finalise its financing and integrate the businesses after closing. Investors will monitor the final debt issuance, interest costs, additional transaction expenses and the pace at which Persistent can improve its margins. The company has secured a strong majority stake in Nagarro, but the transaction is not yet fully completed.
The September-quarter results also set up an important test for management: sustaining revenue growth while controlling acquisition-related costs and managing the balance sheet. If the combined business can deliver stronger scale, customer access and profitability, the acquisition could support Persistent’s longer-term strategy. Until those benefits become visible in financial results, the ₹9,000 crore fundraising remains a major financing commitment that investors will need to assess alongside the company’s growth prospects.
Frequently Asked Questions
1. Why is Persistent Systems raising ₹9,000 crore?
Persistent Systems has approved ₹9,000 crore in debt instruments as part of its financing arrangements for the Nagarro acquisition. The planned fundraising includes refinancing a bridge loan used to fund the transaction.
2. How will the ₹9,000 crore be raised?
The plan comprises ₹8,000 crore in non-convertible debentures and ₹1,000 crore in commercial papers. The instruments are intended to be privately placed and listed on the NSE, subject to the applicable procedures.
3. Why did Persistent Systems’ Q2 profit fall 25.4%?
Reported net profit declined to ₹351.51 crore, partly because of a ₹185.34 crore one-time expense associated with the Nagarro transaction. Operating profit after tax, excluding certain items, rose 5% year-on-year.
4. How much of Nagarro has Persistent acquired?
Persistent secured approximately 94.04% of Nagarro’s share capital and voting rights, excluding treasury shares. It intends to acquire the remaining minority interests after closing, subject to the relevant procedures.
5. What is the total cost of the Nagarro acquisition?
The funding requirement to acquire 100% of Nagarro is estimated at approximately $1.25 billion. Persistent plans to use a combination of equity and debt to finance the transaction.
6. What should investors watch next?
Investors should monitor the final financing terms, acquisition completion, additional transaction expenses, operating margins, cash flow and the combined business’s ability to generate sustainable growth.
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