Sell Coforge; target of Rs 2090: Dolat Capital Market
Dolat Capital Market is bearish on Coforge has recommended sell rating on the stock with a target price of Rs 2090 in its research report dated October 22, 2020.
October 23, 2020 / 12:14 PM IST
Dolat Capital Market's research report on Coforge
NITEC reported revenue growth of 8.1% QoQ in CC terms (DART estm: 8.3%), led by tractions across verticals. EBIT margins stood at 13.8% (up 220bps QoQ) ahead of DART estm of 13.5% led by positive SG&A leverage (up just 4% QoQ). PAT stood at Rs.2.1Bn (ahead of DE Rs2bn). Added strong TCV of about US$201mn in Q2 up 14% on TTM basis at US$785mn. Coforge signed two large deals (a new logo in Insurance with $32mn TCV and a BFS deal with 50% new component). Coforge reiterated its’ Revenue guidance of 6% CC YoY for FY21 and EBITDA margin (pre-PSU) guidance of 17.8%. Although the ask is big, company is confident given robust intake, better pipeline conversion in H2 and improved outlook across vertical including Travel.
Robust performance, strong order traction and confidence on large deal pipeline and its’ conversion leads us to upgrade our earnings estimates by 2%/5% for FY21E/FY22E. Given stretched valuations, we maintain our Sell rating with TP of Rs2,090 valued at 20x FY22E EPS.
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