In the previous trading session, Coforge shares climbed 11%.
The company’s revenue for the quarter was reported at Rs 3,062.3 crore, reflecting a 26.3% increase QoQ and a 33% rise YoY in constant currency (CC) terms.
The EBITDA margin for the quarter stood at 15.8%, an increase of 53 basis points on a year-on-year basis, while cash flow from operations reached $10.9 million. Order intake totaled $516 million, marking the eleventh consecutive quarter with order intakes exceeding $300 million.
What should investors do with Coforge shares? Here’s what analysts say:
Nomura
Global brokerage firm Nomura has retained its ‘Buy’ rating on Coforge, designating it as a top midcap IT pick with a target price of Rs 8,480, up from Rs 8,280.The firm cites a strong executable order book over the next 12 months at $1.1 billion (up 18.32% YoY), a headcount addition of 1,441 (up 5.4% QoQ, excluding Cigniti), a robust pipeline of large deals, and a consistent execution track record.Nomura anticipates USD revenue growth of 12.2% for FY25 and 14.8% for FY26, noting that headcount increased by 13.5% in the first half of FY25. They have increased FY25-27 earnings per share (EPS) estimates by 0.6-2.4%, with a revised target price of Rs 8,480 set at 30x (unchanged) FY27 EPS of Rs 282; the stock is currently trading at 24x FY27 EPS.
JP Morgan
JP Morgan has maintained an Overweight rating on Coforge and raised its target price to Rs 9,300, up from Rs 6,900, designating it as a top pick in the IT services sector.
The increase in target price is primarily due to the consolidation of Cigniti beginning in Q2 FY25, with expectations that the share-swap ratio may be lower than previously anticipated. Analysts project a 15-20% increase in earnings over FY25-27, driven by the expectation that Cigniti will outpace the growth of Coforge’s organic business.
JM Financial
JM Financial has maintained its ‘Buy’ rating on Coforge and raised its target price to Rs 8,530, up from Rs 7,610.
“Coforge reported a well-rounded performance in 2Q. Deal wins were strong (USD 448mn). Our FY26E USD revenue are based on 1.25x current 12-M EOB (consol.), in-line with current conversion ratio. We therefore see limited risk to that. We consolidate Cigniti financials, driving 5-6% EPS upgrade. We now value the stock at 38x (from 35x) to reflect improved outlook,” it said.
Motilal Oswal
Motilal Oswal has maintained its ‘Buy’ rating on Coforge with a target price of Rs 10,000.
The brokerage firm observed that Coforge’s organic growth was broad-based across banking, financial services, insurance, and travel, with order intake rising 43% quarter-on-quarter. The firm believes Coforge’s organic business is in strong shape, with an executable order book up 18% YoY, providing confidence in FY25 growth. Furthermore, Coforge’s presence in high-growth verticals within a recovering demand environment positions it as a growth leader alongside Persistent.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)