Coforge shares: Should you buy, hold or sell this IT stock? Target prices & more

Coforge Ltd might have more upside left following its 11 per cent rally on Thursday, analyst price targets suggest. The IT firm's Q3 revenue growth of 8.4 per cent sequentially in constant currency (CC) terms beat the Street estimates by a wide margin. Coforge reported an order intake of $501 million in the December quarter with four large deals, resulting in a 12-month executable order book of $1.3 billion, up 40 per cent YoY. Ebitda margin at 17.8 per cent, though, fell short of expectations. 

MOFSL said the margins missed estimates but have enough levers to improve. "We expect EBIT margin to sequentially improve over the next few quarters now that most of the integration/one-off expenses are behind. We expect the adjusted Ebitda margin to improve to 18.2 per cent in FY26E from 18 per cent in FY25E; we are comfortable with Coforge utilisation (excl. trainees) range of 83-84 per cent," it said.

A strong executable order book and a rebound in BFS client spending bode well for Coforge's organic business. Cigniti could prove to be an effective long-term asset, MOFSL said while suggesting a target price of Rs 12,000 on the stock. 

Nuvama said Coforge’s strong performance in Q3 and solid TCV set up the base perfectly for 20 per cent-plus YoY growth in FY26. This coupled with margin expansion on ESOP costs coming down should yield 25 per cent-plus strong earnings CAGR over FY24–27E. 

"We maintain Coforge as our top pick in the midcap space as we reiterate our belief in its ability to build a strong business franchise over the next few years. Retain ‘BUY/SO’," it said while raising its target on the stock to Rs 10,850 from Rs 8,650 earlier. 

JM Financial said Coforge’s portfolio tilt towards larger, longer-tenured deals might keep margin expansion under check. It said the reported Ebitda, however, could benefit from progressively lower ESOP cost impact. 

"Our model assumptions reflect these views as 3-4 per cent increase in our FY26-27E EPS flows largely from higher top-line. Still, 26 per cent EPS CAGR over FY24-27E merits premium valuation. We value the stock at 45 times 24-month forward EPS (unchanged) to arrive at our revised target price of Rs 10,990 from Rs 10,429," it said.