Sharekhan's research report on Coforge
Fund-raising through QIP to assist the company in acquiring horizontal capability, forging partnerships/alliances and expansion in existing verticals or building new verticals. The company expects a complete reversal of furloughs and deal ramp-ups to contribute to a sharp uptick in margins in Q4FY24. Further, moderating attrition, peaking out of SG&A expenses, higher offshoring and better utilization would aid in margins uptick in FY25. The robust order book at $974 million executable over the next 12 months provides strong revenue visibility with Book to Bill of 0.9. The recent correction of ~19% from 52-week high provides good investment opportunity and entry point from medium to long-term perspective.
Outlook
We maintain Buy rating on Coforge with unchanged PT of Rs. 7,670 as the company is well placed to deliver top quadrant performance in FY25 given the robust order book, consistent strong order intake and large deal pipeline. Stock trades at 26.4x/21.7x its FY25E/26E EPS.
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