Share price of this mid-cap IT stock jumped by 0.72 percent to Rs. 5,825 on NSE in the morning trading session of Monday, compared to its previous close of Rs. 5,782.9.
With a market capitalisation of Rs. 35,394.4 crores, the company has delivered positive returns of about 41.1 percent in the last one year and nearly 11.5 percent in the last six months. However, so far in 2024, it has given negative returns of around 7.5 percent.
With an unchanged target price of Rs. 7,670, the brokerage firm Sharekhan has maintained a ‘buy’ rating on Coforge Limited, indicating a potential upside of 32% from the intraday high of Rs. 5,825 on NSE.
The company is looking forward to raising funds of about Rs. 3,200 crore and the QIP proceeds would be used for mergers and acquisitions purposes.
According to Business Today, the brokerage firm met the management of the company to get an update on the outlook and growth plans of the company from Qualified Institutional Placement (QIP).
This fund-raising through QIP would assist the company in order to expand in current verticals, forging alliances or partnerships, and acquiring horizontal capability.
On the other hand, the size and margin profile of the target company would provide clarity on whether the mergers and acquisitions would be earning per share (EPS) accretive or dilutive.
Over the next two financial years, the company expects sales to grow at a CAGR of 17 percent and profit after taxes (PAT) to grow at a CAGR of 32 percent.
The brokerage firm has maintained its ‘buy’ rating on Coforge because, with a ~Rs. 8,129.7 crore ($974 million) order book, a consistently strong order intake and large deal pipeline, the company is well-positioned to deliver in the top quadrant performance in FY25.
With a Book-to-bill ratio of 0.9, the strong order book with $974 million executable over the next 12 months offers strong revenue visibility
Additionally, moderating attrition, peaking out of selling, general, and administrative (SG&A) expenses, higher outsourcing and improved utilisation would assist the company in margins uptick in FY25.
In terms of financials, the company’s revenue from operations grew by
nearly 13 percent YoY from Rs. 2,056 crore in Q3 FY22-23 to Rs. 2,323 crore in Q3 FY23-24, accompanied by an increase in the net profit by 3 percent from Rs. 236 crore to Rs. 243 crore during the same period.
As of December 2023, FIIs hold 34.04 percent of the shares, while DIIs hold 55.02 percent of the shares in the company, aggregating to 89.06 percent of the institutional holdings.
Coforge Limited is an India-based global digital services and solutions provider, that offers services including digital solutions, network testing, data analytics, artificial intelligence/machine learning (AI/ML), experience, cloud, business process, and digital process automation.
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