Debasis Mohapatra
Bengaluru, 27 August 2026
Operating margin of Persistent Systems fell in the first quarter of current financial year owing to large deal ramp ups.
In Q1 of FY27, EBIT (earnings before interest and tax) margin of the Pune-headquartered firm came at 16%, which was a decline of 30 basis points on sequential basis.
“Company experienced headwinds of 60bps from lower utilisation (that stood at 86.5%, down 1.5% QoQ) due to proactive hiring ahead of the large-deal ramp,” brokerage firm, ICICI Securities said in a report sourced from Trendlyne.
The report indicated that company saw 20 basis points increase in its direct costs owing to higher purchase cost towards AI tools. However, the mid-tier IT firm also benefitted from rupee depreciation against dollar with 30 basis point benefit.
According to the brokerage firm, management of Persistent Systems continues to target a 16–17% operating EBIT margin range for the year, prioritising growth (investments) alongside margins.
Persistent Systems is one of the few IT services companies among the mid-tier IT firms, which has been consistently reporting sound performance in a tough market.
Its deal pipeline was at a record high with some large deal wins.
“Total deal TCV (total contract value), at $1.15 billion, up 90.8 per cent QoQ led by a proactively originated $650mn, 6.5-year large deal with a US technology giant. New deal TCV component was sharply higher at 83%,” the brokerage report said.
“The $650 million deal has already started contributing to revenue in Q1FY27 (small portion ramped up in Q1). It is expected to reach around 75–80% of its peak revenue run-rate in Q2FY27, and hit full run-rate by Q3FY27,” the report added.
The brokerage firm said that the management is confident of posting sound performance in coming quarters on the back of market share gains among its peers.
