Synopsis:
Coforge Ltd is in focus as Motilal Oswal believes a potential upside of 29 percent from its current level, citing healthy growth prospects and a strong confidence from the management with a healthy order win rate.
The shares of this leading IT solutions provider are in focus as Motilal Oswal expects a significant upside in this company. In this article, we will try to understand the rationale behind this uptick.
With a market capitalization of Rs 58,078 crore, the shares of Coforge Ltd are currently trading at Rs 1,733 per share, representing a decline of 13.5 percent from its 52-week high of Rs 2,003.59 per share. Over the past five years, the stock has delivered a robust return of 338 percent.
Analyst Comment
Leading brokerage house Motilal Oswal has assigned a Buy call on the stock with a target price of Rs 2,240 per share, signalling an upside potential of 29 percent from its current market price.
Motilal Oswal pointed out that Coforge’s management is feeling pretty optimistic about their growth prospects, even though the demand in the IT sector is a bit mixed. They mentioned that while budgets are getting tighter overall, clients are still ready to invest in vendors who offer innovative and outcome-focused solutions instead of just the usual RFP-based options.
There’s a noticeable increase in funding for digital transformation projects, and Coforge is really capitalizing on this trend. The company is aiming for 20 major deals worth over USD 20 million (Rs 174 Crore) in FY26, with five already in the bag. CEO Mr. Sudhir Singh noted that Coforge has a win rate of about 40-45 percent on proactive proposals, which is a significant improvement compared to their RFP-led deals.
On the financial side, Coforge is projecting an EBIT margin of around 14 percent for FY26, which the management believes will be enough to fuel their growth. They also expect a meaningful improvement in cash flow conversion moving forward. Motilal Oswal is confident that Coforge’s solid order book, steady client spending, and the potential for cross-selling with Cigniti put the company in a great position for sustainable organic growth in the years ahead.
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Financial Highlights
Coforge reported a revenue of Rs 3,689 crore in Q1 FY26, up by 57 percent from its Q1 FY25 revenue of Rs 2,357 crore. On a quarterly basis, it increased by 8 percent from Rs 3,410 crore.
Coming to its profitability, it reported a net profit of Rs 356 crore in Q1 FY26, up 156 percent from Rs 139 crore in Q1 FY25. On a quarterly basis, it grew by 16 percent from Rs 307 crore.
The stock of the company has delivered an ROE and ROCE of 16.71 percent and 20.66 percent respectively, and is currently trading at a high P/E of 60.52x as compared to its industry average of 29.22x.
Coforge Limited is an IT solutions company based in India, specializing in a range of services like application development, managed services, cloud computing, and business process outsourcing. They offer programming consultancy and have a global presence, serving clients across the Americas, Europe, the Middle East & Africa, Asia Pacific, and India.
Their services include product engineering, solutions for the Salesforce ecosystem, digital integration, AI-driven services, data analytics, process automation, cloud and infrastructure management, cybersecurity, and advanced application engineering. Coforge collaborates with platforms such as Salesforce, Mulesoft, Tableau, Appian, Pega, and OutSystems, and their cloud offerings include Anyplace Workplace and Anywhere Data Center solutions.
Written by Satyajeet Mukherjee
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