Coforge shares rally over 2% after $2.35 billion Encora deal. Should investors buy the stock now?

Shares of IT services firm Coforge rose 2.5% to hit an intraday high of Rs 1,715 on Monday, December 29, after the company announced the acquisition of U.S.-based AI engineering firm Encora for an enterprise value of $2.35 billion.

This marks one of Coforge’s most ambitious international bets to date and is aimed at strengthening its AI-led service offerings while expanding its footprint in the U.S. and Latin America.

The transaction, which includes a $1.89 billion share swap and provision for retiring Encora’s $550 million term loan via QIP/bridge loan, is expected to close in Q1 FY27. Coforge estimates the combined entity could generate $2 billion in annual revenue by March 2027, with Encora already contributing $600 million in revenue (roughly 30% of Coforge’s current base).


As investor focus shifts to potential earnings impact, several brokerage firms have weighed in with their views and revised targets.

Nuvama: Buy | Target price: Rs 2,250

Nuvama described the Encora acquisition as Coforge’s “biggest and boldest bet yet,” adding that it sees the transaction structure and timing as well-executed. While Encora’s financials haven't yet been included in estimates, Nuvama expects the deal to accelerate Coforge’s growth and reiterated its positive stance on the stock with a "Buy" rating and target price of Rs 2,250.

Motilal Oswal: Buy | Target price: Rs 2,500

Motilal Oswal views Coforge as a structurally strong mid-tier IT player with a robust order book and good traction across verticals. While Encora’s numbers are yet to be factored in, the firm believes the acquisition expands Coforge’s presence in high-growth segments like Hi-Tech and Healthcare. It values Coforge at 32x FY28E EPS and sees a 49% upside potential from current levels.

Emkay Global: Add | Target price: Rs 2,000

Emkay noted that the transaction implies 3.9x EV/FY26E revenue and 20.6x EV/FY26E EBITDA, which it considers demanding due to Encora’s high single-digit revenue growth over the last two years. Despite execution risks and dilution concerns, Emkay sees strategic merit in the deal. It expects the acquisition to be EPS-accretive by FY27 and retained an “Add” rating with a target of Rs 2,000.

Elara Capital: Reduce | Target price: Rs 1,720

Elara Capital took a more cautious stance, downgrading Coforge to “Reduce” and assigning a lower target of Rs 1,720. While it acknowledged strategic benefits such as expansion in North America and the LATAM region, Elara flagged valuation concerns, citing Encora’s relatively modest 7–10% organic growth versus Coforge’s. The 3.9x EV/sales multiple, according to the firm, appears expensive under these metrics.

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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)