Coforge banks on AI, cloud to hit $2 bn milestone by FY26

Coforge

Mid-tier information technology (IT) Coforge is sharpening its focus on artificial intelligence (AI) and cloud-led transformation as it races toward a $2 billion quarterly revenue run-rate by the fourth quarter of FY26.

The company has committed to maintaining at least a 14 percent EBIT margin every quarter and will stop issuing revenue and margin guidance from FY27, according to brokerage houses, citing management’s recent investor interactions.

During a series of investor meetings, Coforge's leadership highlighted its solution-led sales approach, strong visibility on large deals, and firming AI-led demand.

Also, read: Coforge leans on proprietary AI platforms as automation reaches 8% of revenue

Management has ruled out entering any new verticals, geographies, or service lines for the next three to five years, choosing instead to scale the healthcare and public sector businesses it invested in over recent years.

This follows investor pushback over the company’s decision to enter the data-centre space two quarters back.

Meanwhile, both verticals have reached nearly $100 million in revenue and are now being built toward the $500 million mark.

Coforge is also lifting its large-deal ambition, targeting 20 such wins in FY26 after closing 14 last year, according to brokerage firm Elara Securities.

Also, read: 'AI is infra now': Coforge builds full-stack capability for real-world deployments

The company continues to lean on its hyperspecialisation strategy, particularly in travel, insurance, and healthcare, where deep domain expertise has helped convert a steady pipeline into revenue.

Deal flow has remained robust, with quarterly total contract value (TCV) hovering around $500 million and supported by mega engagements, including a $1.5 billion contract in the travel sector.

"The CEO (Sudhir Singh) believes that there is ample growth opportunity for firms such as Coforge with a proactive approach to reach clients, unlike firms which are 'order takers' and dependent on the macroeconomic environment for growth," brokerage Nomura said in its latest report.

Coforge expects the deflationary effects of AI to be outweighed by demand for new transformation programmes.

According to brokerage firm Nirmal Bang, Coforge’s cloud business continues to outpace peers, growing 29 percent year-on-year in the September quarter as more than 160 clients accelerated migration, optimisation, and engineering-led modernisation.

Also, read: Winners and losers: Coforge CEO says AI transition is separating the pack in Indian IT

To strengthen its AI proposition, the company has rolled out new platforms, including Forge-X, an AI-native engineering and delivery system that embeds agentic AI across software development, and expanded the Quasar AI platform with accelerators such as AgentSphere and Trust AI to help enterprises integrate and govern AI at scale.

The company has also set up a z/TPF Centre of Excellence (CoE) to modernise mission-critical mainframe transaction systems in travel, banking, and retail.

Coforge has reiterated that it will not invest further in data centres and will pursue acquisitions only where they provide access to new clients.

Coforge shares tanked over 9 percent on July 24, as investors reacted to a combination of operating margin contraction, negative free cash flow, and a spurt in capital expenditure.

Nevertheless, the Noida-headquartered firm’s recent acquisitions, such as Cigniti, have improved margins and expanded presence in healthcare, retail, and new US regions.

Also, read: TCS to invest $6-7 billion into building data centers; first revenues 18–24 months after start

North America remains the company’s biggest opportunity, particularly in healthcare and in the West and Midwest regions.

ANZ continues to scale ahead of expectations, while in the UK, the public sector business has crossed $100 million after successful project takeovers, including the stabilisation of an NHS modernisation programme.

With strong deal intake, deeper vertical focus, expanding AI platforms, and consistent margin discipline, Coforge believes it is positioned to offset pricing pressure and capture enterprise demand for next-generation transformation.

The company’s execution-heavy model and tight strategic focus underpin its confidence in exiting FY26 at the $2 billion quarterly revenue mark.