Reduce Coforge; target of Rs 6150: Dolat Capital Market

Dolat Capital Market's research report on Coforge

Coforge reported a miss on CC Rev growth of 1.6% QoQ (DE:1.9%) due to decline in BFS (-4%). Adj. EBITDA margin down 111bps QoQ to 17.9% (DE:18.1%) due to visa & onsite ramp-up (wage hike moved to Q2). ▪Mgmt. expects Adj. EBITDA margin gains of 50bps YoY for both H1FY25 and FY25 (flat at reported level).

Outlook

We expect 8.5% organic growth, while note some risk on steep OPM recovery outlook.We tweak our FY25/FY26E EPS estimates by 1.1%/1.2%, following a slight miss in Q1 performance. Maintain ‘Reduce’ rating with revised TP of Rs.6,150 (earlier Rs.5,250) at 32x FY26E (TP revised up given Reduced uncertainty around M&A/Growth commentary).

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