Buy Coforge; target of Rs 5500: Sharekhan

Sharekhan's research report on Coforge

Reported revenue stood at $271.8 million, up 2.7%q-o-q/18.4% y-o-y in constant currency (cc) terms, missing our estimates of 3.5% q-o-q growth. Adjusted EBIDTA margin declined to 16%, down 360 bps q-o-q /50 bps y-o-y due to global salary hikes, visa costs, etc. Company reported a record order intake of $ 531 million. Management reiterated its FY24 annual revenue growth guidance of 13% to 16% in constant currency and the annual adjusted EBITDA guidance of around 18.3%. Despite the challenging demand environment, the company remains confident in achieving revenue growth guidance due to consistent order intake, robust 12-month executable order book, recent large deal wins, and strong net additions.

Outlook

Hence, we maintain Buy rating with a revised price target of Rs. 5500. At the CMP, the stock trades at 28.1x/22.9x its FY24/25E EPS.