Digital IT Services: Read-across from Persistent-Nagarro deal

Research evidence excerpt

Digital IT Services: Read-across from Persistent-Nagarro deal

28 June 2026

Digital IT Services EquitiesTMT

Read-across from Persistent-Nagarro deal United States

◆ AI concerns look overdone to us; low legacy exposure and Phani Kanumuri

agility could help digital IT services in AI era Analyst, TMT HSBC Securities (USA) Inc.

phani.kanumuri@us.hsbc.com

◆ GLOB, EPAM and DAVA could be viewed as attractive M&A +1 240 709 8135

candidates, but existing employee buy-in looks key Madhvendra Singh*, CFA

Senior Analyst, TMT

HSBC Bank Middle East Limited, DIFC

◆ Maintain Buy on GLOB, EPAM and DAVA; we make no madhvendra.singh@hsbc.com

change to target prices and ratings +971 450 93348

Ali Naqvi*

Senior Global TMT Analyst

Digital IT services – Depressed valuations could drive M&A interest: Current HSBC Bank Middle East Limited, DIFC ali.naqvi@hsbc.com

valuations appear weighed down by AI-related concerns, which we view as overdone. +44 20 7992 2176

GLOB, EPAM and DAVA trade on FY27e PE of 4-6x, a sharp discount to their past

valuations. In the past, M&A discussions tended to position these companies as * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is

not registered/ qualified pursuant to FINRA regulations

acquirers of smaller assets, supported by strong organic growth and higher

valuations that made their equity an attractive acquisition currency. Following the

recent de-rating, we have received increasing investor questions on whether digital IT

services firms could instead become targets. We think current valuation levels are

increasingly compelling for large-scale M&A, although management and employee

buy-in could be key, given the people-centric nature of the business.

Read-across from the Persistent-Nagarro deal: On 26 June, Persistent (PSYS IN,