Motilal Oswal's research report on Coforge
COFORGE reported strong 1QFY26 revenue growth of 8.0% QoQ in CC terms, above our estimate of 7.0% QoQ CC. The company reported an order intake of USD507m( +61% YoY) in 1Q with five large deals, resulting in a robust 12-month executable order book of USD1.55b. EBIT margin stood at 13.2%, below our estimate of 14%. PAT stood at INR3.1b (up 21.2%/142% QoQ/YoY). M&A expenses stood at INR19m compared to INR148m in 4QFY25. The company’s revenue/EBIT/adj. PAT grew 8.2%/35.7%/138% YoY. We expect revenue/EBIT/adj. PAT to grow 33.1%/54.1%/61.8% YoY in 2QFY26. COFORGE’s strong executable order book and resilient client spending across verticals bode well for its organic business. That said, softer cash flow performance during the quarter may exert pressure on the return profile. We now value COFORGE at 38x (vs 40x earlier) FY7 EPS, arriving at a TP of INR 2,240, implying 34% potential upside.
Outlook
We value COFORGE at 38x (earlier 40x) FY27E EPS with a TP of INR2,240, implying a 34% potential upside. We reiterate our BUY rating on the stock.
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