Coforge Aims To Grow In Mid-Teens Through Next Fiscal Despite Macro Hiccups

Jefferies maintains a 'buy' rating on Coforge with a revised target price of Rs 6,580, implying an upside of 13.8%.

Coforge building in Noida (Photo: company)

Coforge Ltd. is confident of growing in the mid-teens in the current and the next financial years in its endeavour to become a $2-billion company.

The digital engineering company expects to clock a revenue growth at the lower end of its guidance of 13–16% in the current fiscal, Coforge's deputy chief financial officer, Saurabh Goel, told Jefferies Financial Group Inc. during an investor meeting.

This is despite higher-than-expected furloughs in the October–December quarter and unfavourable macroeconomics, according to a note by Jefferies on Sunday. The Noida-based company aims to clock similar growth in the next fiscal on the back of deal wins even if the demand doesn't pick up.

Jefferies On Coforge: Key Takeaways

  • Jefferies maintains a 'buy' rating on Coforge with a revised target price of Rs 6,580 from an earlier Rs 5,250, implying an upside of 13.84%.

  • Macro remains challenging, furloughs longer than usual in the third quarter due to shorter notices.

  • Recent deal wins suggest that the outlook for the fourth quarter may be better.

  • Company is winning deals in the banking, financial services and insurance space, not much traction in travel.

  • Focus on cost optimisation to improve margins by 150–300 basis points over the next three–four years.

  • A well-diversified revenue stream—public sector, healthcare, hitech and retail—key to becoming a $2-billion enterprise.

  • Barings, which recently sold its stake in Coforge, had limited influence on operations.

  • Focus remains on delivering sector-leading growth despite promoter exits.

Also Read: Wipro’s Chief Growth Officer Resigns In Tenth Senior-Level Exit This Year

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WRITTEN BY
Tushar Deep Singh
Tushar Deep Singh is a Mumbai-based business journalist reporting on India'... more
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