Coforge Ltd. share price target

AI a growth driver, not disruption risk: Management acknowledged industrywide AI productivity headwinds of 25-30% over the next 3-5 years but expects these to be more than offset by AI tailwinds in existing services (2030%) and AI driven new services (30-40%) thereby cumulatively boosting the industry by 50-70%, over the same period (Exhibit 3-9). Strong outlook across core verticals: BFS, Insurance, Travel and Public Sector remain core growth engines. Management also sees increasing opportunities in healthcare and government-led digital transformation programs. Management...

The company’s growth strategy is centered on four pillars, with an emphasis on execution, big bets focused on strengthening core capabilities in AI-led engineering, data and integration, and cloud, while deepening its presence in industries (healthcare in the US and public sector in the UK).

Coforge has rebuilt its offerings by embedding agentic AI across all its solutions. This is leading to AI deflation or cannibalisation of revenue, but concurrently is lifting revenue in new areas such as: AI-led application management services; tech modernisation; and AI-native product engineering.

We attended Coforge's Analyst Day, where discussions were centered on the company's medium-term growth aspirations, margin outlook following the Encora acquisition, evolving commercial models and the role of AI across its key verticals.

As per market consensus, Coforge is trading at 1 yr fwd P/E of 23x (3 yr avg P/E of 34x), offering attractive valuation. Coupled with a strong executable order book, diversified vertical growth, and enhanced AI-led capabilities, the company is well-positioned to deliver sustained...

Q4FY26 & FY26 Performance: Coforge reported revenue of US$489.1 mn, up 1.7% QoQ/ 21.2% YoY in US$ terms (+2% QoQ CC/ +28.7% YoY CC). EBITDA margin came at 20.6%, up ~232 bps QoQ while EBIT margin stood at 16.6%, up ~231 bps QoQ. Reported PAT (continuing business) stood at 612.3 crore, up 144.8% QoQ/135.7% YoY. For FY26, revenue stood at US$1.87 bn, up 29.1% YoY. EBITDA margins came at 18.6%, up ~430 bps YoY while EBIT margin stood at 14.4%, up...

Coforge delivered a strong performance in FY26, growing 29.2% in dollar terms for the full year, with Q4FY26 EBIT margins stood at a record 16.6%, expanded by 430bps YoY mainly driven by AI-led automation of internal processes, SG&A leverage, and third-party cost reduction. The executable order book stands at USD 1.75bn (up 16.4% YoY), with additional framework agreements from the UK public sector not yet reflected in this number. Management guided for FY27 EBITDA margins of 20.521% (consolidated) and standalone EBIT of 16.517%, representing a structural reset not cyclical one. Free cash flow guidance upgraded sharply to ~100% of PAT from prior...

Coforge’s organic revenue growth for FY27 is likely to be impacted by exit of low-margin India portfolio and weak exit runrate in its largest vertical BFS. It has a healthy next-12-month orderbook (up 16% YoY), and agreements with UK public sector clients not yet included in order book could lead to healthy revenue recovery from Q2FY27.

4Q weaker on revenue but better on margins. FY26 showed strong organic growth of ~25%. Expect organic growth of ~13% in FY27

Given the company's strong growth potential, backed by robust deal wins and superior execution capabilities, we maintain our BUY rating on the stock.

Steady revenue growth & strong margin expansion in Q4 Deal momentum continues with healthy order intake The revenue growth performance (2.0% QoQ CC) was tad above our estimates (1.8% QoQ CC), aided by broad-based growth excluding BFS. The softness in BFS was led by client-specific challenges along with the transition of new senior leader. However, management anticipates BFS recovery, as it progresses through FY27, aided by large deal wins. Deal momentum remained strong with 21 large deals in FY26, with healthy order intake of US$ 648mn in Q4 & executable order book of US$ 1.75bn (+16.4% YoY)....

COFORGE reported a strong 4Q revenue growth of 2% QoQ in CC terms, above our estimate of 1.5% QoQ CC. The company reported an order intake of USD648m (down 69.5% YoY) in 4Q with five large deals, resulting in a robust 12-month executable order book of USD1.75b.

Since the US–Iran conflict broke out, Coforge Ltd (COFORGE) has witnessed a decline of 9-10% (45% from its peak) and underperformed some of its mid-cap peers by 2-9%.

We maintain our BUY rating on the stock.

Q3FY26 Performance: Coforge reported revenue of US$478.2 mn, up 4.4% QoQ/ 21.5% YoY in CC terms. Adj. EBITDA margin (ex-one-off from new labour code, M&A legal expenses and legal provision) came at 17.4%, up ~80 bps QoQ. Adjusted EBIT margin came at 14.4%, down 60 bps QoQ. Adj. PAT (ex-one-offs) stood at...

COFORGE reported a strong 3Q revenue growth of 4.4% QoQ in CC terms, above our estimate of 3.3% QoQ CC. The company reported an order intake of USD593m (up 18% YoY) in 3Q with six large deals, resulting in a robust 12-month executable order book of USD1.7b.

Coforge has delivered a strong Q3FY26 performance and has reported 4.4% sequential constant-currency growth, driven by strong large-deal wins and rapid scaling of key accounts. The next 12-month executable order book stands at a record USD 1.72bn, up 30%YoY, giving high revenue visibility. Margins remain healthy, with reported EBIT at 13.4% despite wage hikes (~150bps impact) and hedge losses which was partially offset by cost optimization initiatives & lower ESOP costs, and management has reiterated confidence of reaching ~14% EBIT for FY26 and improving further in FY27. Free cash flow generation is strong at...

Our Take: The deal enhances Coforge's structural strengths yet, we turn cautious due to - (i) potential earnings dilution in FY27 despite management's accretion commentary and (ii) PE investor stake-sale overhang. Given deal size and leverage/QIP optionality, we also see risk of multiple compression, until integration progress becomes visible as market sentiment and valuation may...

Coforge announced the acquisition of Encora, a US-based engineering and AI-led services firm with revenue of ~USD500m, adding ~26% to Coforge’s FY26E revenue base.

We recommend a BUY on the stock and value the company at 38x multiple to its FY27E earnings to arrive at a TP of Rs 2,300/share, implying an upside of 18% from the CMP.