Shares of Persistent Systems fell nearly 4% in Monday's trading session after the IT services company disclosed that its board of directors will consider fundraising options at a meeting scheduled for September 2.

The upcoming board deliberation has raised questions among market participants about how the company plans to finance its recently announced acquisition of Nagarro, as well as the potential for equity dilution should the fundraising involve issuing new shares. Equity fundraising by listed Indian companies typically requires shareholder approval and pricing in accordance with securities regulations, which can weigh on near-term share performance when dilution is anticipated.

Persistent Systems is a Pune-headquartered Indian IT services provider specializing in software product development, digital engineering, and cloud services. The company's shares are listed on Indian stock exchanges, including the National Stock Exchange (NSE) and BSE. Like many mid-tier Indian IT firms, Persistent has pursued acquisitions as a growth strategy, and large deals often necessitate debt or equity financing, making the structure of any fundraising a key consideration for shareholders.

The announcement follows the company's recent disclosure of the Nagarro acquisition, a deal that would require substantial financing. Investors will be watching the September 2 board meeting closely for details on the size, structure, and method of any proposed fundraising. Nagarro, a Germany-rooted IT services firm with a global delivery footprint, would broaden Persistent's international presence if the transaction is completed as announced.

Further updates are expected once the company releases the outcome of the board meeting.

Source: CNBC-TV18