Synopsis:
Coforge Ltd, gained on CLSA and Morgan Stanley optimism, driven by strong order book, domain expertise, and robust financial performance, with analysts projecting significant upside.
Shares of an IT stock have captured investor attention after strong brokerage commentary suggested significant upside potential. The stock surged following CLSA’s initiation of coverage and optimism from Morgan Stanley, reflecting confidence in the company’s leadership, domain expertise, and robust order book. Analysts highlighted the company’s consistent execution, strategic client relationships, and structural growth opportunities in key verticals as key drivers for future gains.
Coforge Ltd, with a market capitalization of Rs. 53,829.81 crore, opened at Rs. 1,589.55 against a previous close of Rs. 1,548.90 and reached an intraday high of Rs. 1,610.50, marking a rise of 4.0 percent from its previous close.
CLSA on Coforge
CLSA has initiated coverage on Coforge with an ‘outperform’ rating, setting a target price of Rs. 2,346, implying an upside of 51.46 percent from yesterday’s closing price. The brokerage firm emphasized the company’s able leadership and strong execution under CEO Sudhir Singh.
The analysts noted that management’s focus on building domain expertise, coupled with a consulting mindset, has been central to the company’s growth. CLSA highlighted Coforge’s healthy order book and projected FY26–28 revenue, EBIT, and EPS CAGRs of 15 percent, 16 percent, and 22 percent, respectively.
The firm also underscored the company’s ability to combine deep client relationships with domain expertise. Five of its top ten clients have grown at a 15 percent CAGR over FY18-25, while financial services and travel verticals expanded at 20 percent and 12 percent CAGR, respectively.
CLSA further noted that Coforge has built niche expertise by working closely with partners such as Duck Creek and Guidewire in insurance, as well as automation platforms like Pega and Mendix.
Additional positives include a strong governance framework and high ESG scores, positioning the company to benefit from structural IT demand. In its note, CLSA wrote, “With its industry-leading order book, consistent strategy and strong leadership, Coforge is on track to deliver healthy growth.”
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Morgan Stanley on Coforge
Morgan Stanley has maintained an overweight rating on Coforge with a target price of Rs. 1,880, a potential upside of 21.37 percent from the previous close, highlighting expectations that the share price will outperform the broader country index over the next 60 days.
The brokerage expects both revenue growth and margin trends to remain strong in Q2 and H2, sees limited downside risk to consensus EPS estimates, and anticipates potential improvement in free cash flow margins, noting the scope for re-rating from current levels.
Financial Snapshot- Q1 Summary
Quarter-on-Quarter: Coforge reported sales of Rs. 3,689 crore, up 8.2 percent from Rs. 3,410 crore in the previous quarter. Operating profit increased to Rs. 577 crore, rising 9.5 percent QoQ from 527 crore. Profit before tax improved to Rs. 436 crore from Rs. 395, higher by 10.4 percent, while net profit rose to Rs. 356 crore from 307 crore, up 16.0 percent compared with the preceding quarter.
Year-on-Year: On a yearly basis, sales jumped from Rs. 2,357 crore to Rs. 3,689 crore, an increase of 56.5 percent. Operating profit surged from Rs. 309 crore to Rs. 577 crore, up 86.7 percent. PBT climbed from Rs. 211 crore to Rs. 436 crore, a rise of 106.6 percent, and net profit more than doubled from Rs. 139 crore to Rs. 356 crore, marking a 156.1 percent increase.
About the Company
Coforge is a global digital services and solutions provider that leverages emerging technologies and deep domain expertise to deliver tangible business impact for its clients. By focusing on select industries, understanding their underlying processes, and partnering with leading technology platforms, Coforge has become a trusted partner in client transformation initiatives. The company’s Product Engineering approach utilizes AI, Cloud, Data, Integration, and Automation technologies to drive high-growth, intelligent enterprise solutions. Coforge operates 30 global delivery centers across 23 countries.
Written By Manan Gangwar
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