Buy Coforge; target of Rs 8900: Sharekhan

Sharekhan's research report on Coforge

Coforge reported revenue of $369.4 million, up 26.8% q-o-q/32.8% y-o-y. Organic revenue stood at $309.8 million, up 5.5% q-o-q in constant currency terms, beating our estimate of $305.9 million. Adjusted EBITDA margin declined ~127 bps q-o-q to 16.6% owing to wage hike. The executable order book over the next 12 months jumped to $1.3 billion from $1.07 billion, up 40% y-o-y. The company is committed to its medium-term guidance of not only reaching the $2 billion mark but also delivering a concurrent material expansion in EBITDA.

Outlook

We maintain BUY with a revised PT of Rs. 8,900 (valued at 40x its Sep26E EPS). At CMP, the stock trades at 49.3/39/31x its FY25/26/27E EPS.

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