Buy Coforge; target of Rs 2100: Emkay Global Financial

Moneycontrol • 6 days ago

Original source

Key Investment Pillars

  • Coforge's revenue growth was 10.1% qoq to $652.2mn, below expectations, but the company signed 8 large deals in 2Q with a broad-based order intake of over $1bn.
  • The next 12M executable orderbook stands at $2.38bn, up ~45% yoy, with management expecting deal momentum to sustain in 3Q.
  • Coforge added a second client with an annualized run rate of >$100mn, one of its highest-margin relationships.
  • Management raised its FY27 EBITM guidance to 16% from 15.5%, targeting 17% in 4Q driven by gross margin uptick.

Thesis Validation Checklist

  • Investors should watch for sustained deal momentum, margin expansion, and improvement in cash conversion over the next 12 months.
  • The company's ability to integrate Encora and achieve synergies will be crucial, as well as its progress in embedding AI across its operations.
  • Any significant decline in revenue growth or margin expansion would challenge the bullish thesis.