The proposed combination of Persistent and Nagarro is set to create the world’s second-largest digital engineering company by revenue and India’s seventh-largest technology services company, with an annualised revenue run rate of more than $2.9 billion.
According to Persistent, the combined entity will have a strong transatlantic presence, generating more than $1.7 billion in revenue from North America, over $600 million from Europe and more than $400 million from the rest of the world.
Persistent told investors that the merged group will also have significant scale across industry verticals, with annual revenues exceeding $500 million each in Banking, Financial Services and Insurance (BFSI), Healthcare and Life Sciences (HLS), and Technology, Media and Telecommunications (TMT). The Industrial vertical is expected to contribute more than $400 million, Consumer over $300 million, while the Public Sector and Education segment will generate more than $100 million.
The combined organisation will employ more than 46,000 professionals and serve over 350 marquee clients through an expanded partner ecosystem spanning hyperscalers, independent software vendors (ISVs), frontier AI laboratories and niche technology partners.
Strategic rationale
Pune-based Persistent has signed an agreement to combine with Munich-headquartered digital engineering company Nagarro to form the Persistent × Nagarro Group.
As part of the transaction, Persistent has secured an approximately 21% stake in Nagarro through an agreement with its founding shareholder and has launched a voluntary public takeover offer for the remaining Nagarro shareholders. Nagarro’s Management Board and Supervisory Board have endorsed the transaction and intend to recommend that shareholders accept the offer.
Persistent said the global market for AI-led engineering and digital transformation is consolidating around a limited number of partners that possess the scale, end-to-end capabilities, AI platforms and local presence needed to serve enterprises across industries.
The company noted that it has consistently articulated its intention to pursue a complementary acquisition in Europe. It believes Nagarro offers an ideal strategic fit, providing a highly complementary business that accelerates the creation of a global leader in digital and AI-led engineering, a milestone that would otherwise have taken years to achieve organically.
Financial outlook
Persistent said Nagarro reported EBITDA of €118.7 million for CY25, representing an EBITDA margin of 11.9%.
Management identified one-time items worth €19.5 million, including a €12.4 million impact related to India’s Labour Code, taking the reported adjusted EBITDA to €138.2 million, with a margin of 13.8%. For the trailing 12 months ended March 2026, reported adjusted EBITDA stood at €139.1 million, translating into a 13.9% margin.
Subject to auditor review, Persistent said an unrealised foreign exchange loss of €15.5 million on intra-group loans may also be added back. Including this adjustment, CY25 adjusted EBITDA rises to €153.7 million (15.4% margin), while adjusted EBIT stands at €118 million (11.8%). On a trailing 12-month basis ended March 2026, adjusted EBITDA increases to €154.6 million (15.5%) and adjusted EBIT to €119.1 million (11.9%).
Persistent noted that the accounting treatment of foreign exchange gains and losses within EBITDA depends on the nature of the underlying transaction, adding that it records such expenses below the EBITDA line.
EPS accretive transaction
Persistent said the acquisition will be earnings per share (EPS) accretive. On an illustrative pro forma trailing 12-month basis, assuming 100% consolidation of Nagarro and excluding one-time transaction-related expenses, the combined group is expected to report revenue of $2.795 billion, EBITDA of $463 million with a margin of 16.6%, EBIT of $337 million and profit after tax (PAT) of $215 million.
Under this scenario, pro forma EPS increases to $1.36 from Persistent’s standalone EPS of $1.30 (₹127 versus ₹121), making the transaction EPS accretive.
The projections are based on key assumptions, including total acquisition financing of $1.498 billion, comprising $1.143 billion for the share acquisition and $354 million to refinance Nagarro’s existing debt. Other assumptions include a first-year interest cost of $62 million on a five-year EMI repayment schedule, acquisition amortisation based on 30% of the purchase consideration allocated to intangible assets over eight years, an exchange rate of ₹93 per US dollar, $1.14 per euro, a blended tax rate of 25% and an interest rate of EURIBOR plus 2.2%, or approximately 5%.
Persistent clarified that the revenue and EBITDA figures are based on actual trailing 12-month performance up to March 2026 and do not constitute management guidance.
Regulatory approvals and timeline
As Nagarro is listed in Germany, the transaction is subject to both German and Indian regulatory requirements.
The formal takeover offer must first be reviewed and approved by Germany’s financial regulator, BaFin, before it can be opened to shareholders.
For the acquisition to be completed, shareholders representing at least 50% plus one share of Nagarro’s outstanding share capital, including the stake already acquired by Persistent, must tender their shares.
The company expects the transaction to close in the fourth quarter of calendar year 2026 or the first quarter of calendar year 2027. Until then, Persistent and Nagarro will continue to operate as independent, separately managed companies.