Coforge Ltd faced a stock price decline of 10 percent after announcing its Q4 financial results and the acquisition of Cigniti Technologies, although brokerages maintain a positive outlook for the IT firm. For the March 2024 quarter, Coforge reported a 94.86 percent year-on-year increase in consolidated net profit to Rs 223.7 crore, while consolidated revenue from operations rose by 8.7 percent to Rs 2,358.5 crore. The company’s board recommended an interim dividend of Rs 19 per share, with a record date set for May 15, 2024. Ebitda margins improved, the order book showed robust growth, and management articulated their confidence in robust organic growth for FY25, attributed to a 17.3 percent higher executable order book and synergies from the acquisition. Despite not providing quantitative guidance and acknowledging challenging environment conditions, management has a positive outlook, thanks to long-term contracts and a strong sales and marketing strategy. Brokerages like Nirmal Bang and Choice Broking reiterated buy ratings with target prices based on P/E multiples on FY26E EPS predictions, while some such as Nuvama Institutional Equities and JM Financial revised their target prices downward, still maintaining buy recommendations but with lowered growth and margin assumptions. The acquisition of Cigniti is anticipated to contribute towards Coforge’s growth to a $2 billion company by FY27 and improve operating margins significantly.

Information Technology Services, Financial Markets, Mergers and Acquisitions,India

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