ICRA Limited has placed Persistent Systems Limited's (PSL) '[ICRA] AA+ (Stable)' rating on Rating Watch with Negative Implications. This action follows PSL's announcement on June 27, 2026, regarding its proposed acquisition of Nagarro SE, a Germany-headquartered digital engineering and technology services company. ICRA's decision reflects the uncertainty surrounding the final stake acquired in Nagarro, the resultant leverage on PSL's balance sheet, and the overall credit metrics. The finalization of these aspects will be critical from a credit perspective. The acquisition is expected to significantly increase PSL's scale, broaden its geographic and industry diversification, and expand its service capabilities and client base. Revenues of PSL and Nagarro stood at USD 1.6 billion and USD 1.1 billion, respectively, in FY2026. The combined entity is projected to generate annual revenues of around USD 2.9 billion, with a combined employee base of over 46,000 across more than 40 countries. However, the transaction, proposed to be funded entirely through debt via a EUR 1.4 billion bridge financing facility, is expected to materially increase PSL's consolidated leverage. The company's leverage is projected to be in the range of 2.0-4.5 times over the medium term. This debt-funded nature and the size of the transaction are expected to weaken PSL's financial risk profile in the medium term, despite the potential strengthening of its business profile. ICRA will continue to monitor the transaction's progress, including the final acquisition structure, funding arrangements, integration plans, and leverage levels.
