Neutral Coforge; target of Rs 4850: Motilal Oswal

Motilal Oswal's research report on Coforge

Coforge (COFORGE) reported 2QFY24 revenue growth of 2.3% QoQ in CC terms, in line with our estimates. Reported revenue stood at USD278.1m (up 2.3% QoQ/12.6% YoY). The growth was broad-based across verticals and service lines, with BFS leading the pack by clocking 4.0% QoQ growth. TTH and insurance grew 2.3% QoQ each during the quarter. The company reported a robust order intake of USD313m in 2Q with three large deals (2 NN+ 1 Renewal), one in BFS and two under TTH verticals. These took the overall deals signed in 1HFY24 to USD844m (BTB of 1.5x), and resulted in a robust 12-month executable order book of USD935m (+16.5% YoY). Despite macro challenges and near-term demand softness, management maintained its FY24 USD CC revenue growth guidance of 13-16% YoY.

Outlook

We believe the robust outlook is already factored into the price and we do not see any potential upside from here. Our TP of INR4,840 implies 26x FY25E EPS. We reiterate our NEUTRAL rating on fair valuations.