Buy Coforge; target of Rs 6200: Sharekhan

Sharekhan's research report on Coforge

Coforge reported revenue at $278.1 million, up 2.3% q-o-q/14.1% y-o-y in constant currency, missing our estimate of 2.8% q-o-q growth, led by BFS, Insurance and Travel, Transportation and Hospitality (TTH). Reported EBITDA margin stood at 15.3%, up 33 bps q-o-q, lower than our estimate of 16.6%. The quarter saw a one-time increase in ESOP costs due to an acceleration in ESOP investment. The company reported a record order intake of $313 million and signed three large deals during the quarter. Management reiterated its FY24 annual revenue growth guidance of 13% to 16% in constant currency. The company reported a decent quarter, though revenue growth was a tad lower than expectations. The company continues to reiterate its revenue growth guidance, led by the consistently robust order intake, strong 12-month executable order book, recent large deal wins, and continued net additions.

Outlook

Hence, we maintain Buy rating with unchanged price target of Rs. 6,200. At the CMP the stock trades at 25.4x/21x its FY25/26E EPS.