Reduce Coforge; target of Rs 8600: Emkay Global Financial

Emkay Global Financial recommended reduce rating on Coforge with a target price of Rs 8600 in its research report dated January 24, 2025.

Broker Research

January 24, 2025 / 12:31 IST

Reduce

26 Aug, 2025 12:21

Volume

Todays L/H

Emkay Global Financial's research report on Coforge

Coforge reported strong topline growth of 8.4% QoQ (CC), well ahead of our estimate of 4.7%. Growth was healthy across most horizontals, verticals, and geographies. Adjusted EBITDAM expanded by 130bps QoQ to 17.8% despite the impact of furloughs, while reported EBITM of 11.8% was slightly short of our estimate. Deal wins were steady at USD501mn, with the next 12M executable order book at USD1.4bn, up ~40% YoY. The management has highlighted that synergies with Cigniti have been better than their initial expectations, and Cigniti’s adjusted EBITDAM has already reached 17.3%, up by more than 600bps since the merger. There has been a definite yet gradual improvement in the demand environment across all sectors which, coupled with the strong executable order book and robust pipeline, should support growth momentum in FY26.

Outlook

We tweak FY27-27E EPS by -3% to 2%, factoring in the Q3 performance and higher ETR. Valuations remain rich; we maintain REDUCE with an unchanged TP of Rs8,600 at 36x Dec-26E EPS.

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