Persistent Systems shares will be in the spotlight during today's session as global brokerage firm CLSA reiterated its bullish stance on the IT services company following its recent acquisition of Germany-based digital engineering firm Nagarro. CLSA has maintained a 'High Conviction Outperform' rating on the leading tech stock, setting a target price of Rs 5,659.
The brokerage's optimism stems from the strategic alignment of the two companies, with the global brokerage highlighting that the Nagarro buyout is a "perfect fit" for Persistent's long-term growth ambitions. Following the announcement of the high-profile transaction, Persistent Systems' management provided rationales to justify the move.
ALSO READ: Persistent Systems To Acquire Nagarro, Eyes $2.9 Billion IT Powerhouse
The integration is expected to significantly expand the company's geographical footprint-especially in Europe-while bolstering its AI, digital engineering capabilities, and exposure to new industry verticals. The combined Persistent-Nagarro entity has set ambitious financial targets for the coming years:
Revenue Growth: Management aspires to achieve mid-teens organic revenue growth for the newly combined organization.
Profitability: The company anticipates its EBIT margins will stabilize between 16% and 17% over the next 6 to 8 quarters.
Looking at the bottom line, the acquisition is expected to be financially rewarding for investors. Analysts projections indicate a 4% EPS accretion to the proforma estimates for FY28, showcasing the immediate value generated by bringing the two digital engineering players together. The deal also broadens Persistent's total addressable market to more than $1.4 trillion.
ALSO READ: 'Two Similar Companies': Persistent Systems CEO Explains Why Nagarro Is The Right Fit
The acquisition is expected to reshape Persistent's geographic mix. Europe will account for about 22% of the combined company's revenue, up from 9% currently, while North America will remain its largest market with around 62% of revenue. The transaction, if completed, will create a technology services company with an annual revenue run rate of nearly $2.9 billion.
It will also create a workforce of more than 46,000 employees across over 40 countries, significantly expanding Persistent's global scale and European presence. The entity will employ over 37,000 people in India, more than 3,500 in North America, and over 3,000 in Europe.
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