Persistent Systems reported Q2 FY27 revenue of $488 million, beating forecasts, while EBIT margins stood at 15% due to costs from the Nagarro acquisition. Although profit after tax missed estimates, the company's book-to-bill ratio remains stable at 1.3x. Investors may track whether profitability improves as integration expenses stabilize in the second half of the fiscal year.
Persistent Systems reported a strong performance in the second quarter of the 2027 fiscal year, with revenue reaching 488 million USD. This result exceeded the company's earlier revenue forecast of 475 million USD, reflecting a 7.8% quarter-on-quarter increase in constant currency terms. Despite this positive top-line growth, the company faced some pressure on its bottom line due to specific acquisition-related expenses.
The company reported EBIT margins of 15% for the quarter, falling slightly short of the estimated 15.6%. This margin performance was primarily impacted by approximately 1.9 billion INR in expenses related to the recent acquisition of Nagarro. When adjusted for these one-time integration costs, the company's profit trajectory remains healthy. On a half-year basis, adjusted EBIT and profit after tax grew by 25.7% and 9% respectively compared to the same period last year.
While the Total Contract Value saw a sequential decline to 634 million USD, the company maintains a stable book-to-bill ratio of 1.3x. This ratio helps investors understand the health of future order execution, suggesting that the company continues to see consistent demand despite broader challenges in the IT sector. Brokerage firm Motilal Oswal noted the company's growth potential in its recent report, maintaining a buy rating with a price target of 6,700 INR, based on a valuation of 35x estimated fiscal year 2028 earnings.
Looking ahead, projections for the second half of the 2027 fiscal year suggest an acceleration in financial performance, with expected year-on-year growth rates for revenue, adjusted EBIT, and adjusted profit after tax estimated at 26.5%, 25.1%, and 24.8% respectively. The key monitorable for investors will be whether these projections materialize, especially as the company works to integrate the Nagarro business and manage its operating margins. As integration costs normalize, the focus will likely shift to whether the company can maintain its margin expansion and translate its order book into sustained earnings growth.