How to add a watermark to a PDF file?

The fact that the file size increases is a good indication that the watermark is added. The main problem is that you’re adding the watermark outside the visible area of the page. See How to position text relative to page using iText?

You need something like this:

Rectangle pagesize = reader.GetCropBox(pageIndex);
if (pagesize == null)
    pagesize = reader.GetMediaBox(pageIndex);
img.SetAbsolutePosition(
    pagesize.GetLeft(),
    pagesize.GetBottom());

That is: if you want to add the image in the lower-left corner of the page. You can add an offset, but make sure the offset in the x direction doesn’t exceed the width of the page, and the offset in the y direction doesn’t exceed the height of the page.

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