Neutral Coforge; target of Rs 4460: Motilal Oswal

Motilal Oswal recommended Neutral rating on Coforge with a target price of Rs 4460 in its research report dated July 21, 2023.

Broker Research

July 22, 2023 / 12:23 IST

neutral

Motilal Oswal's research report on Coforge

Coforge (COFORGE) posted 1QFY24 revenue growth of 2.7% QoQ in CC terms, below our estimate of 3.2%. Reported revenue stood at USD271.8m (up 2.8% QoQ/13.9% YoY). The growth was broad-based across verticals and service lines with Insurance/ BFS leading the growth pack at +4.7%/+3.1% QoQ, while TTH was up 1.2% QoQ. The company recorded the highest ever TCV wins during the quarter with two large deals in BFS vertical having a TCV of USD300m (for five years) and USD65m, taking the overall deal signed in 1Q to USD531m (BTB of 2.0x). This resulted in a robust 12- month executable order book of USD897m (+20.4% YoY), despite adverse macros. COFORGE 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 INR4,460 implies 23x FY25E EPS. We reiterate our NEUTRAL rating on fair valuations.

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