Buy Coforge; target of Rs 2200: Motilal Oswal

Motilal Oswal's research report on Coforge

We recently interacted with COFORGE’s CFO to understand the company’s growth outlook, execution strategy, and margin trajectory. Key takeaways: 1) COFORGE has reiterated its target of reaching USD2b revenue by FY27, driven by strong organic momentum and cross-selling opportunities from Cigniti; 2) With an executable order book of ~USD1.5b (+47% YoY), near-term revenue visibility remains high, and management expects organic growth in FY26 to outpace FY25 levels; 3) The company’s BFSI and transportation verticals remain core growth engines, each delivering +20% YoY growth in FY25 despite a challenging macro environment; and 4) Margin outlook is constructive, with oneoffs behind and levers like delivery mix and lower ESOP costs offering ~100-120bp upside by FY27. We continue to view COFORGE as a structurally strong mid-tier player well-placed to benefit from vendor consolidation/cost-takeout deals and digital transformation. Cigniti could also prove to be an effective longterm asset.

Outlook

We value COFORGE at 38x FY27E EPS with a TP of INR 2,200, implying a 18% potential upside. We reiterate our BUY rating on the stock.

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