Coforge shares fall 5% on Q2 earnings; brokerages share target prices: Check details

Coforge Ltd shares fell 5% on Monday morning after the IT services company reported its September quarter results and raised its full-year operating margin guidance. The company reported consolidated revenue growth of 54% year-on-year (YoY), while fresh order intake more than doubled from a year earlier.

Following the development, Coforge Ltd shares fell 4.51% to a session low of Rs 1,814.35 apiece, compared with the previous close of Rs 1,900. The stock opened at Rs 1,847.70 and touched a high of Rs 1,872.65 during the session.

Coforge reported consolidated revenue of Rs 6,170.8 crore for Q2 FY27, up 53.6% YoY and 11.6% quarter-on-quarter (QoQ). Revenue in constant currency terms grew 10.9% QoQ, while organic constant-currency growth stood at 3.8%, as the reported sequential performance also reflected the consolidation of Encora. Revenue in dollar terms stood at US$652 million, up 41.1% YoY.

Earnings before interest and tax (EBIT) rose 67.8% YoY to Rs 984.7 crore, while the EBIT margin stood at 16%, expanding 134 basis points from a year earlier. Reported profit after tax (PAT) increased 56.5% YoY to Rs 588.1 crore. The company's adjusted PAT was also a key focus in brokerage assessments, although estimates differed based on the adjustment basis used.

Coforge reported fresh order intake of around US$1.04 billion during the quarter, up 102% YoY and 51% QoQ. It signed eight large deals, the highest number secured in a single quarter in the company's history. The 12-month executable order book increased 45% YoY to around US$2.4 billion, providing revenue visibility for the coming quarters. Management expects to sign eight or more large deals in Q3 FY27.

The company raised its FY27 consolidated EBIT margin guidance to 16% from 15.5% earlier and is targeting a reported EBIT margin of 17% in Q4 FY27. It expects margins to remain above 17% thereafter, while retaining its FY27 Ebitda margin guidance of 20.5-21%. Management cited AI-led productivity improvements, general and administrative (G&A) cost efficiencies, and better economics in fixed-price projects as potential drivers of margin expansion.

Nirmal Bang Institutional Equities maintained its Hold rating on Coforge and raised its target price to Rs 2,150, implying an upside of 13.2% from its cited market price of Rs 1,900. The brokerage noted that reported sequential revenue growth was supported by Encora's consolidation, while organic constant-currency growth was 3.8%. It highlighted the improvement in EBIT margin and the increase in FY27 margin guidance, but remained cautious about potential generative AI-led revenue compression and pricing pressure across the technology services sector.

Choice Institutional Equities raised its target price to Rs 2,320 from Rs 2,135, citing stronger deal momentum and a higher expected margin profile. The brokerage's report, dated October 25, put the stock's potential upside at 22.7%, including a dividend yield of 0.6%, from its cited price of Rs 1,914. Choice raised its FY27 and FY28 earnings-per-share estimates by 3.3% and 8.3%, respectively, and expects revenue, EBIT and PAT to grow at compound annual growth rates of 26.7%, 33.5% and 38.7%, respectively, over FY26-FY29.

Motilal Oswal Financial Services retained its positive view on Coforge and set a target price of Rs 2,370, implying a potential upside of 25% from its cited price of Rs 1,900. The brokerage valued the company at 32 times FY28 estimated earnings per share, compared with 29 times earlier. It highlighted the record order intake, eight large deal wins, improving margin outlook and expected growth acceleration in the second half of FY27 as key positives. It also flagged AI-led pricing pressure and the need to convert the order pipeline into organic revenue growth as factors to monitor.