Coforge shares fall over 3%. What are Jefferies, Emkay saying after Chairman, independent director exit?

Shares of Coforge fell more than 3% to Rs 1,784 on the BSE on Tuesday after independent director and NRC chairperson DK Singh resigned on Friday, days after chairman OP Bhatt stepped down. At an investor call on Monday, the company reiterated its FY27 financial guidance and said the recent board developments had not changed its strategy or priorities.

Coforge continues to target a consolidated EBITDA margin of 20.5%-21%, an EBIT margin of at least 15.5% and free-cash-flow conversion of above 100% of PAT for FY27. It has also retained its $5 billion four-year target.

All seven board members participated in Monday’s investor call, with the management reiterating that the recent governance developments had not affected the company’s strategy, priorities or FY27 outlook. Coforge also said Q2FY27 could be its highest-ever quarter in terms of large-deal signings, pointing to strong deal activity during the current quarter.


Coforge has begun a global search for two new independent directors and appointed executive search firm Egon Zehnder to oversee the process. The move follows Singh’s resignation on September 11, days after Bhatt’s exit. Singh had cited differences and tension between independent and executive directors, a claim that Coforge has rejected as unfounded.

The company said interim chair Vivek Sharma would not seek the permanent chairperson’s position and that the role would be considered only for an independent director. Questions were also raised about Sharma’s independence during the investor call. The management said his appointment followed an 11-month global search that considered 21 candidates, of whom eight were shortlisted. Shareholders later approved his appointment with more than 83% support.

Coforge said it does not expect any further board churn and that the board is currently functioning as a cohesive team. On the possibility of another independent or third-party investigation, Audit Committee Chair Anil Chanana said no further external review is planned.

The management said KPMG had already carried out the external internal-audit review and that it did not consider another adviser necessary. The governance concerns stem from observations around the process followed for the Board Evaluation Exercise, which Coforge has sought to separate from its operating and financial performance.

What are experts saying?

Jefferies has retained a Buy rating on the stock with a target price of Rs 2,040, an upside of 10% from current levels. “The clarification suggests that this issue is less about governance and more about conduct. We see limited impact of these developments on Coforge's growth strategy,” the brokerage said in a note.

The NRC has initiated a global search for two additional independent directors, supported by Egon Zehnder, with a focus on candidates with relevant governance experience, professional expertise and strategic perspectives. Separately, Coforge will undertake a structured process to appoint a new Board Chairperson, considering both existing (excluding Vivek Sharma) and new independent directors.

Emkay has increased the target price to Rs 2,000 from Rs 1,800, suggesting that governance remains strong. “The board viewed the recent exits as an isolated matter linked to the internal review process rather than a broader governance issue, with no bearing on Coforge’s operations or growth outlook. Continued board cohesion is reflected in the unanimous approvals of key strategic decisions since 2024, including the Encora acquisition, AdvantageGo divestment, and Sabre contract. With the remaining board working cohesively, no further churn is expected”, it said.

Jefferies is of the view that the Board's clarification yesterday suggests that this issue is less about governance at Coforge and more about conduct of departing directors. We see limited impact of these developments on Coforge's growth strategy. Given the sharp 70% rally in the stock in the last six months, the stock may see some consolidation on the back of this development. We believe any sharp weakness in stock should be bought into.

Coforge’s boardroom saw two independent director exits in quick succession, with Chairman O P Bhatt stepping down on September 8, followed by the resignation of independent director and NRC Chair D K Singh. However, management and independent board members sought to reassure investors during the call that the issue was limited to concerns flagged in the internal audit review and was not expected to have any impact on Coforge’s financials or operations.

Disclaimer: This article has been written by Veer Sharma, who is not a SEBI-registered Research Analyst or an Investment Adviser. Veer Sharma and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.