Coforge shares slip in early trade as $1-billion Encora deal talk, fundraising plans weigh

Coforge

Coforge shares opened lower on Friday, extending recent losses amid investor caution over its planned fundraising and reported talks to acquire US-based digital engineering firm Encora in a deal potentially valued at over $1 billion.

In early trade, Coforge stock was down 0.77 percent at Rs 1,724.3 on the NSE. The shares have fallen 6.5 percent over the last five sessions and are down 10.44 percent year-to-date, underperforming some larger IT peers amid concerns around equity dilution.

Moneycontrol has reported that Encora, backed by private equity firm Advent International, is among the companies with which Coforge has held advanced discussions, according to people familiar with the matter. Neither Coforge nor Encora has commented publicly on the matter.

The company has called a board meeting on Friday, December 26 to consider a fundraising proposal. While the firm has not linked that move to any acquisition, investors are drawing parallels to its last major capital raising -- a Rs 2,240-crore QIP which helped fund the purchase of Cigniti Technologies.

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Analysts say a deal of this scale could bolster Coforge’s cloud, data and product engineering capabilities while expanding its global footprint. It would also be one of the sector’s largest transactions in recent years.

Growth still strong

Despite market jitters, Coforge remains one of the faster-growing mid-tier IT companies. Revenue in FY25 surged 32 percent to over Rs 12,050 crore ($1.45 billion), with improvements in margins and broad-based expansion across geographies and verticals. The company’s headcount has risen over 35 percent this fiscal to 33,497 employees.

Coforge is targeting a $2-billion revenue run-rate in the coming quarters and has committed to maintaining at least a 14 percent EBIT margin every quarter. Its management has previously said it does not plan to enter new verticals or service lines in the near term, focusing instead on scaling healthcare and public sector businesses.

The company is also sharpening its AI-led transformation strategy, with automation-driven services contributing around 8 percent of revenue. Attention will be on any developments from the analyst meeting scheduled later today, where management commentary could influence sentiment around the proposed fundraising and ongoing M&A interest.

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