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Informist, Thursday, Jan. 23, 2025

 

--Coforge Oct-Dec consol net profit INR 2.16 bln 

--Analysts saw Coforge Oct-Dec consol net profit INR 2.68 bln

--Coforge Oct-Dec consol net profit INR 2.16 bln vs INR 2.02 bln qtr ago

--Coforge Oct-Dec consol revenue INR 33.18 bln vs INR 30.62 bln qtr ago

--Coforge Apr-Dec consol net profit INR 5.51 bln vs INR 5.84 bln year ago

--Coforge Apr-Dec consol revenue INR 87.81 bln vs INR 68.21 bln year ago

 

By Rajesh Gajra

 

NEW DELHI – Information technology services company Coforge Ltd. missed the Street's estimate for its bottom line for the quarter ended December, but beat that for its revenue. As expected, the company, which reported its December quarter earnings early Thursday, did not match the exceptionally strong earnings performance it had reported in the previous quarter.

 

For the December quarter, the consolidated net profit of Coforge was INR 2.16 billion, up 6.9% on quarter, and significantly below analysts' estimate of INR 2.68 billion. In the previous quarter, the company's net profit had jumped 51.8% on quarter, the highest sequential growth rate in 30 quarters.

 

The company reported consolidated revenue from operations of INR 33.18 billion for the December quarter, up 8.4% sequentially, and above the Street estimate of INR 32.38 billion. But similar to the net profit, the revenue growth for the December quarter was much below the 33-quarter high growth rate of 27.6% reported in the previous quarter. In constant currency terms, Coforge's revenue increased 7.5% on quarter to $397.1 million, above analysts' estimate of $386.85 million. All consolidated earnings numbers reported by Coforge included those of Cigniti Technologies Ltd., whose acquisition by the company was completed in the September quarter.

 

Chief Executive Officer and Executive Director Sudhir Singh said in a press release that despite the December quarter being a seasonally weak one, the company recorded 8.4% sequential revenue growth and the quarter saw "four large deals...a concurrent and material sequential expansion of 122 bps in margins, a Cigniti business that has already touched an EBITDA (earnings before interest, tax, depreciation, and amortisation of 17.3%". Singh said "a large deals pipeline that is looking very robust and finally an ever strengthening next twelve month signed order book which now is 40% higher YoY gives us confidence that the coming year shall once again see robust and sustained growth".

 

Coforge's executable order book over the next 12 months increased to $1.37 billion at the end of December from $1.31 billion at the end of the previous quarter, according to data from the company's investor presentation. Fresh order intake, however, declined in the December quarter to $501 million from $516 million in the September quarter. The company said four large deals were signed during the quarter across North America and Southeast Asia. The company added 14 new clients in Oct-Dec, against 13 in the previous quarter, and the repeat business portion declined sequentially to 94.5% from 95.5%.

 

There was an uptick in the operating profile risk of Coforge in the December quarter as the revenue concentration of the top five clients rose to 19.8% from 18.7% a quarter ago. The revenue concentration of the top 10 clients also increased sequentially in the December quarter to 30% from 28.2%.

 

The company's consolidated EBITDA was up 7.2% quarter-on-quarter to INR 5.19 billion, but the EBITDA margin contracted to 15.6% from 15.8%. Key factors for the margin contraction were employee stock options plan costs, including that given to Cigniti's leadership, and expenses from the integration and merger of Cigniti. The employee count of Cigniti increased to 33,094 at the end of December from 32,483 a quarter ago. The employee attrition rate, however, worsened marginally to 11.9% from 11.7%.

 

The company's bottom line performance for the December quarter largely tracked the revenue and EBITDA growth. It was, however, marginally hit by a 9.4% rise in tax expenses at INR 874 million, against INR 799 million the previous quarter.

 

On Thursday, Coforge declared interim dividend of INR 19 per share and said the record date for the dividend payout would be Jan 30. Shares of Coforge ended 0.4% lower on Thursday at INR 8,228.20 on the National Stock Exchange.  End

 

Edited by Avishek Dutta

 

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