Shares of IT services firm Coforge Ltd. continued their upward trajectory for a fourth consecutive session on Wednesday, trading 2.02 percent higher at Rs 1,719.60. This surge follows the company's strong first-quarter earnings report.
Q1 Performance Exceeds Expectations
Motilal Oswal Financial Services Ltd (MOFSL) noted that Coforge reported a Q1 revenue growth of 1.1 percent quarter-on-quarter (QoQ) in constant currency (CC) terms, surpassing their initial estimates. The company secured an order intake of $691 million in Q1, marking a 36.3 percent year-on-year (YoY) increase, and included four significant deals. Consolidated EBIT margin stood at 16 percent, outperforming the consensus estimate of 15.6 percent. Adjusted consolidated PAT reached Rs 560 crore, an 83.2 percent YoY increase, also above the consensus estimate of Rs 540 crore.
Analyst Ratings and Revised Targets
Following the robust Q1 results and the integration of Encora, several brokerage firms have updated their ratings and target prices for Coforge shares:
- Motilal Oswal Financial Services (MOFSL): Maintained a 'Buy' rating with a revised target price of Rs 2,200.
- JM Financial: Revised FY27E–29E EPS by 6–9 percent and updated the target multiple to 25x Mar'28E, yielding a revised target price of Rs 1,795 (up from Rs 1,610). They maintained an 'ADD' rating.
- Equirus Securities: Kept a 'Long' rating with a September 2027 target price of Rs 1,930 (up from Rs 1,410).
- Nuvama Institutional Equities: Upgraded FY27E/28E EPS by 4.7 percent/3.4 percent due to better margins. They retained a 'BUY' rating with a target price of Rs 2,350 (up from Rs 2,200), valuing it at 32x FY28E PE.
- Elara Capital: Downgraded the stock to 'Reduce' from 'Accumulate', citing limited upside potential after the recent sharp run-up in the stock price. They pegged the stock at Rs 1,750.
The company's strong order intake and margin performance have largely contributed to the positive sentiment among analysts, despite some caution regarding the stock's recent valuation surge.