Buy Coforge; target of Rs 10000: Motilal Oswal

Motilal Oswal is bullish on Coforge has recommended buy rating on the stock with a target price of Rs 10000 in its research report dated October 23, 2024.

Broker Research

October 24, 2024 / 19:34 IST

Buy

26 Aug, 2025 12:21

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Motilal Oswal's research report on Coforge

COFORGE reported 2QFY25 organic revenue growth of 6.3% QoQ in USD terms, above our estimate of 4.3%. It reported an organic CC QoQ growth of 5.5% (consol. CC QoQ growth of 26.3%). Consol. revenue stood at USD369.4m (up 26.8% QoQ/32.8% YoY). Organic order intake of USD448m in 2Q with three large deals, resulting in a robust organic 12-month executable order book of USD1,105m (+18% YoY). Organic EBIT margin, adjusted for transaction-related costs of INR201m, came in at 12.2% (est. 12.5%). Organic adj. PAT stood at INR1.8b (+39.5% QoQ/2.7% YoY) due to lower SG&A costs and higher other income. The company’s revenue grew 10.4% in 1HFY25, while EBIT/PAT declined 0.7%/12.4% vs. 1HFY24 in organic terms. We expect revenue/EBIT/PAT to grow organically by 19.0%/20.6%/17.0% YoY in 2HFY25. We reiterate our BUY rating on COFORGE with a TP of INR10,000, implying a 32% potential upside.

Outlook

We value COFORGE organically at 40x Sep’26E EPS (vs. 38x earlier) and value the Cigniti business at 25x Sep’26E EPS. This SOTP-based approach yields a rounded TP of INR10,000 (INR8,700 for COFORGE and INR1,300 for Cigniti). We reiterate our BUY rating on the stock with a TP of INR10,000, implying a 32% potential upside.

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