Axis Securities report on Coforge
In Q1FY24, Coforge Ltd (Coforge) reported revenue of Rs 2,221 Cr, up 2.4% QoQ and 2.8% QoQ (in CC terms) which stood below than our expectations. The company’s operating profit stood at Rs 332 Cr, reporting a decline of 16.8% on a QoQ basis due to higher operating expenses. Its operating margins declined by 386bps to 14.9%, which was largely led by higher operating expenses, wage hikes, and a higher onsite expenses during the quarter. The company posted net profit of Rs 165 Cr in Q1FY24, registering an excellent growth of 43% on a QoQ basis.
Outlook
We recommend a Hold rating on the stock and assign a 21x P/E multiple to its FY25E earnings of Rs 238.7/share to arrive at a TP of Rs 4,910/share, implying an upside of 2% from the CMP.
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