Buy Coforge, target price Rs 12,000: Motilal Oswal Financial Services

Motilal Oswal Financial Services has a buy call on Coforge Ltd. with a target price of Rs 12,000. The current market price of Coforge Ltd. is Rs 9085.8. Coforge, incorporated in 1992, is a Mid Cap company with a market cap of Rs 60737.07 crore, operating in IT Software sector.

Coforge's key Products/Revenue Segments include Sale of services and Software Products for the year ending 31-Mar-2024.

Financials

For the quarter ended 31-12-2024, the company has reported a Consolidated Total Income of Rs 3377.80 crore, up 8.31 % from last quarter Total Income of Rs 3118.60 crore and up 44.46 % from last year same quarter Total Income of Rs 2338.30 crore. The company has reported net profit after tax of Rs 255.90 crore in latest quarter.

The company's top management includes Mr.Om Prakash Bhatt, Mr.Anil Chanana, Ms.Mary Beth Boucher, Mr.Gautam Samanta, Mr.Sudhir Singh, Mr.Om Prakash Bhatt, Mr.D K Singh, Mr.Anil Chanana, Ms.Mary Beth Boucher, Mr.Gautam Samanta, Mr.Sudhir Singh, Mr.D K Singh. Company has S R Batliboi & Associates LLP as its auditors. As on 31-12-2024, the company has a total of 7 Crore shares outstanding.

Investment Rationale

Coforge reported 3QFY25 strong revenue growth of 8.4% QoQ in CC terms, above our estimate of 4.9% QoQ CC. Reported revenue stood at $397 million (up 7.5% QoQ/40.8% YoY). The company reported an order intake of USD501m in 3Q with four large deals, resulting in a robust 12-month executable order book of USD1.3b (+40% YoY). The brokerage has raised its FY25 estimates by 6%, reflecting the company's stronger-than-anticipated growth and a broad-based performance across verticals, while keeping the FY26/27 estimates largely unchanged. They believe Coforge's strong executable order book and a rebound in BFS client spending bode well for its organic business. Cigniti could prove to be an effective long-term asset. We value COFORGE at 43x FY27E EPS with a targe price of Rs 12,000, implying a 31% potential upside. Motilal Oswal reiterates a BUY rating on the stock.

Promoter/FII Holdings
Promoters held 26.63 per cent stake in the company as of 31-Dec-2024, while FIIs owned 42.55 per cent, DIIs 47.86 per cent.