29 Jun , 2026 By : Debdeep Gupta
Persistent Systems shares tumbled nearly 10 percent on June 29 after the IT services company announced plans to acquire German digital engineering firm Nagarro SE in a Euro 1.4 billion deal. Brokerages offered sharply divergent views on the transaction, ranging from very bullish to bearish.
The stock fell as much as 9.8 percent to Rs 4,365.5, extending early morning losses, and emerging as the top loser on the BSE Midcap index. The decline extended the stock's one-year loss to 27.7 percent, compared with a 5.6 percent decline in the Nifty 50.
The acquisition, announced on June 27, involves a voluntary public takeover offer by Persistent System's subsidiary Galaxy Germany Holding to acquire all outstanding shares of Nagarro SE at Euro 81 per share in cash. The offer values Nagarro at an enterprise value of about $1.4 billion and carries a 140 percent premium to the German company's undisturbed closing share price on June 25.
Citi maintained a 'Sell' rating on Persistent with a target price of Rs 4,090, implying about 15 percent downside from the previous close. The brokerage said the acquisition strengthens Persistent's European presence and gives it meaningful scale across key verticals. But, it described the transaction as expensive given Nagarro's historical growth trajectory, current global valuations and comparable deals.
Citi said that Persistent trades at around 33 times FY27 estimated earnings, a significant premium to peers, adding that investors will also need to monitor integration risks in the near term. It expects the combined entity to deliver only low double-digit year-on-year growth initially, although management has guided for the acquisition to be cash EPS accretive and EPS accretive, excluding one-off costs, in the first year.
Nomura retained its 'Neutral' rating with a target price of Rs 5,200. The brokerage highlighted that Persistent has agreed to acquire the 21 percent stake held by Nagarro's largest shareholder and plans to eventually acquire 100 percent of the company and delist it. It also pointed out that Nagarro operates in more than 40 countries with around 18,500 employees, with North America contributing 35 percent of its revenue.
CLSA reiterated its 'High Conviction Outperform' rating and target price of Rs 6,520, implying about 35 percent upside from the previous close. The brokerage said the deal is valued at 1.2 times EV/sales and 9.6 times EV/EBITDA, adding that although Persistent is paying a 140 percent premium, Nagarro's growth has trailed Persistent's organic growth. CLSA expects the acquisition to deliver around 6 percent EPS accretion.
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