Key Takeaways:
- Nagarro is positioning itself as a leader in AI and data engineering, while executing strategic expansion initiatives in Japan, the German Mittelstand, and forming partnerships in Edge AI.
- Nagarro stock could reasonably reach about EUR 90/share by the end of 2029, based on our mid-case valuation assumptions.
- This implies a total return of 77% from today’s price of EUR 51/share, with an annualized return of 14% over the next 4.3 years.
Nagarro SE is a German-based digital transformation and technology consulting company that provides comprehensive digital product engineering and technology solutions globally.
Founded in 1996 and headquartered in Munich, it operates as a mid-sized, engineering-focused firm serving clients across multiple industries, including automotive, banking, healthcare, retail, and telecommunications.
Nagarro offers an extensive portfolio of services spanning artificial intelligence and data analytics, cloud computing, cybersecurity, digital experience solutions, and enterprise architecture consulting.
It specializes in helping businesses modernize their technology infrastructure through services like DevOps, intelligent process automation, and digital commerce solutions. The company also provides cutting-edge capabilities in areas such as quantum computing, AR/VR, blockchain, and IoT solutions.
With 188 clients generating over EUR 1 million in annual revenue each, Nagarro maintains strategic relationships across diverse sectors, positioning itself as a trusted partner for digital transformation initiatives.
An asset-light business model and global delivery capabilities allow it to serve clients from its operations in Germany, the United States, India, and other international markets.
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Wha Is Nagarro Stock Down In 2025?
Nagarro’s stock has declined significantly in 2025, falling approximately 35.7% year-to-date, driven by several interconnected challenges that have weighed heavily on investor sentiment.
The primary culprit has been massive currency headwinds that have masked the company’s underlying operational improvements.
The pronounced weakening of the US dollar against the euro has resulted in substantial non-cash accounting losses of EUR 18 million in the first half of 2025 alone.
These currency revaluations on internal loans and bank deposits have impacted the company’s bottom line, making the business appear to be underperforming when, in fact, its core operations have strengthened.
Market conditions in the IT services sector remain challenging, with what CEO Manas Fuloria described as “relatively slow demand for IT services.”
This broader industry slowdown has constrained growth opportunities and pressured margins across the sector. Additionally, specific industry verticals that Nagarro serves, particularly telecom, media, and entertainment, have been under pressure.
It has also been forced to revise its full-year guidance downward. Revenue expectations have been adjusted to the lower end of the EUR 1.02-1.08 billion range, while adjusted EBITDA margins are now expected to be between 13.5% and 14.5%, down from the original target of 14.5-15.5%.
This guidance reduction, despite strong operational performance, reflects the ongoing impact of currency fluctuations and a cautious market outlook.
Nagarro has temporarily paused its share buyback program due to banking covenant considerations related to equity positions amid currency volatility, removing a potential source of stock price support that investors had come to expect.
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Is Nagarro Stock Undervalued Right Now?
Despite the stock’s poor performance, several factors suggest Nagarro may be undervalued at current levels, presenting a compelling opportunity for investors willing to look beyond near-term headwinds.
Its operational performance has strengthened considerably, with gross margins improving from 30% to 33.2% year-over-year thanks to productivity gains from its margin support program.
This demonstrates management’s ability to drive structural improvements even in a challenging environment. Without the EUR 18 million currency impact, the company would have delivered adjusted EBITDA margins at the high end of its original guidance range.
Nagarro is strategically positioned to capitalize on the emerging wave of AI and data engineering. Management reports that clients now have a much clearer understanding of AI benefits and are increasingly comfortable with implementation, leading to accelerated internal innovation activities.
As an engineering-focused firm that is “big enough to have a seat at the table and small enough to drive transformation in a cost-efficient way,” Nagarro appears well-positioned for this next phase of digital transformation.
The company is executing multiple strategic growth initiatives that are expected to drive acceleration beyond typical sector growth.
These include expanding into the Japanese market through strategic partnerships, deepening relationships with the German Mittelstand beyond traditional SAP work, and developing Edge AI and IoT capabilities through partnerships with companies like Advantech.
Management expects these initiatives to contribute meaningfully to revenue later in 2025 and beyond.
Nagarro’s financial position remains robust, with EUR 121.8 million in cash and a manageable net leverage ratio of 1.8 times.
The company continues to maintain a diverse client base with minimal concentration risk, as its top five clients represent only 15% of total revenue. This diversification provides stability and reduces exposure to any single industry downturn.
The currency impacts that have weighed on 2025 results are largely one-time in nature and should not recur if exchange rates stabilize. This suggests that the current stock price may not reflect its operational performance and future earnings potential.
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Our Valuation Assumptions
Based on the valuation analysis and forward projections, Nagarro’s stock presents varying return scenarios depending on its execution and the timing of market recovery.
Low Case (45% total return): Nagarro continues to face headwinds from slow IT services demand and ongoing currency volatility. Revenue growth remains subdued, at around 5% annually, and the company struggles to capitalize on AI and data engineering opportunities fully.
Margins remain pressured by competitive dynamics and the need for reinvestment. Despite these challenges, a strong operational foundation and diversified client base provide downside protection. The stock price might reach EUR 74, representing a 9% annualized return over a 4.3-year period.
Mid Case (77% total return): This base case assumes Nagarro successfully executes on its strategic initiatives while benefiting from a gradual recovery in IT services demand.
The company could achieve mid-single-digit revenue growth (5.5% annually) while expanding its AI and data engineering capabilities.
In this scenario, the net income margin improves to 7% as Nagarro benefits from operating leverage, while the target price reaches EUR 90.38, delivering a 14% annualized return.
High Case (107% total return): In the optimistic scenario, Nagarro emerges as a leader in the AI and data engineering transformation wave, driving accelerated growth and margin expansion.
Strong execution should lead to improved net income margins of 7.2% and multiple expansion as investors recognize the company’s transformation. Target price reaches approximately EUR 106, representing an 18.3% annualized return.
The mid-case scenario appears most probable given management’s track record, the company’s strategic positioning in high-growth areas like AI, and the temporary nature of current currency headwinds.
However, the wide range of potential outcomes reflects both the significant upside potential and the execution risks inherent in the current transformation of the IT services industry.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
