Coforge Q1 results preview: Profit set to more than double; 5 key factors to track

Coforge Ltd is likely to report more than doubling of net profit in the June quarter on a 40-55 per cent year-on-year (YoY) surge in sales. Stock investors would be keenly following the IT firm's commentary on margin structure under the recently announced mega deal with Sabre. Besides, they would look at the growth outlook for BFS and Insurance verticals, and update on open offer for the remaining stake in Cigniti, in addition to subsequent plans for margin improvement. A sharp rise in capex (5 per cent of revenues) is another important aspect to understand from the company, analysts said. 

The IT firm is scheduled to report Q1 results on Thursday, July 24.

HSBC expects Coforge to report 119 per cent YoY rise in net profit at Rs 292.60 crore compared with Rs 133.20 crore in the same quarter last year. Revenue is seen rising 48.2 per cent YoY to Rs 3,694 crore against Rs 2,400 crore in the year-ago quarter. Ebit margin is seen at 13.1 per cent against 13.2 per cent in the March and 13.6 per cent in the year-ago quarter.

The foreign brokerage expects Coforge to post 5 per cent revenue growth in organic constant currency (CC) terms. The inorganic contribution from the recent acquisition Rythmos & TMLabs deals is seen at 1 per cent.

"Bookings should remain healthy at $500 million. Expect growth to be led by Travel and BFS. EBIT margins are expected to be steady at c13 with lower ESOP costs and D&A offsetting the unfavourable currency impact," HSBC said.

Kotak sees net profit for Coforge surging 166.50 per cent YoY to Rs 360.90 crore. It sees sales rising 56.5 per cent YoY at Rs 3,756 crore. It sees another quarter of strong deal signings, even as they may be lower than numbers in March 2025 quarter that included $1.6 billion from Sabre deal.

"We expect investor focus on—(1) quality of financials in light of concerns of non-recurring elements in margins and moderate cash generation, (2) drivers for strong deal wins at a time when the rest of the industry is struggling to grow, (3) factors underlying confidence of strong FY2026, (4) drivers for margin improvement, (5) new deal TCV and 12-month order backlog trends and (6) update on timelines to reach $2 billion in revenue and 14 per cent EBIT margin," Kotak said.

InCred Equities projected profit at Rs 317.40 crore. It said ramp-up of large deals in transportation, executable order book, and inorganic contribution to aid sequential CC revenue growth. The EBIT margin expansion could be modest despite growth leverage, this brokerage said.

"We expect Coforge to deliver robust revenue growth of 5.2 per cent QoQ, primarily driven by growth in the BFSI vertical and ramp-up of the Sabre deal. Moreover, its operating margins are likely to grow by 98bps QoQ due to higher operating leverage," Axis Securities said.