Buy Coforge; target of Rs 4680: Sharekhan

"India’s specialty chemicals industry is a decadal growth opportunity and it is still not too late to participate in the value creation process. We prefer CRAMS/CSM players Navin Fluorine (Navin) and PI Industries (PI) as they provide long-term earnings visibility. We also like UPL due to robust growth outlook and reducing debt concerns and SRF due to rising contribution from the chemicals business," JM Financial research report.

Sharekhan's research report on Coforge

Q1FY23 revenue growth was a tad below estimates and margins too were off the mark owing to investments in talent & wage revisions. Q1FY23 saw healthy fresh order bookings, sustained large deal wins (greater than $50 million), stable attrition and logo addition. Management reiterated revenue growth outlook of at-least 20% on CC terms after factoring in all possible macro events and adjusted EBITDA margin band of 18.5-19% for FY2023. It remains confident of clocking a 100-250 bps q-o-q rise in margin in Q2FY23. Medium-term growth to be led by sustained large order intake, investment in talent, recovery in travel industry, robust growth momentum in BFS and solid execution. EBITDA margin to improve in FY2023E, primarily aided by increasing offshore revenue and pyramid rationalisation.

Outlook

We maintain a Buy on Coforge with an unchanged PT of Rs. 4,680, given strong earnings visibility, robust order bookings and stable margin outlook.

More Info

At 11:06 hrs COFORGE LIMITED was quoting at Rs 3,746.35, up Rs 43.60, or 1.18 percent.

It has touched an intraday high of Rs 3,762.00 and an intraday low of Rs 3,680.00.

It was trading with volumes of 7,283 shares, compared to its thirty day average of 13,562 shares, a decrease of -46.30 percent.

In the previous trading session, the share closed down 2.31 percent or Rs 87.55 at Rs 3,702.75.

The share touched its 52-week high Rs 6,133.00 and 52-week low Rs 3,224.45 on 04 January, 2022 and 15 June, 2022, respectively.

Currently, it is trading 38.91 percent below its 52-week high and 16.19 percent above its 52-week low.

Market capitalisation stands at Rs 22,830.22 crore.

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Coforge - 250722 -khan