Earnings Outlook
Robust banking business, deals to boost Coforge's Q1 sales
This story was originally published at 17:11 IST on 22 July 2025
Register to read our real-time news.Informist, Tuesday, Jul. 22, 2025
By Arya S. Biju
MUMBAI – Ramp-up of deals won in previous quarters, contributions from recent acquisitions along with continued robust organic growth, and healthy demand in the banking and financial services vertical are expected to boost Coforge Ltd.'s top line for the June quarter. The company's bottom line is expected to rise at its fastest pace in three quarters as most of the expenses related to the acquisition of listed company Cigniti Technologies Ltd. were incurred in the financial year 2024-25 (Apr-Mar). The company's June quarter financial results are expected to be the best among the 13 information technology companies that are part of the Nifty 200 index.
The company is also expected to benefit from a favourable portfolio with low exposure to the manufacturing business, as analysts believe IT companies with high exposure to the manufacturing and retail segments have been affected more by the uncertainty over US tariffs and deferred client spending.
The digital services and solutions provider's consolidated net profit for the June quarter is expected to rise nearly 30% on quarter and more than double on year to INR 3.39 billion, according to the average of estimates from 14 brokerages. Its consolidated revenue for the quarter is expected to rise a little over 9% on quarter and 55% on year to INR 37.26 billion. This will be the fifth successive quarter of sequential growth in revenue and fourth quarter of sequential growth in net profit for the company.
Motilal Oswal Financial Services Ltd. has the highest estimate for the company's bottom line at INR 3.85 billion and HSBC Global Research has the lowest estimate of INR 2.93 billion. Dolat Capital Market Pvt. Ltd. has the highest estimate of INR 37.81 billion for the company's net sales and Indsec Securities and Finance Ltd. has the lowest estimate of INR 35.20 billion.
In dollar terms, the company is expected to report a consolidated revenue of $429.95 million for the June quarter, up from $403.5 million a quarter ago and $291.4 million a year ago. Kotak Institutional Equities expects the company's recent acquisitions of Rythmos Inc. and TMLabs Pty. Ltd. to contribute $8 million to its total revenue during the reporting quarter. Brokerage HSBC expects revenue from these acquired businesses to add 1% to the company's total sales.
In constant currency terms, the company's revenue is expected to grow 5.8-7.3% on quarter, estimates from seven brokerages showed. ICICI Securities expects the company's revenue in constant currency terms to grow 5.8% on quarter on account of the ramping up of its mega deal with Sabre Corp. won in the March quarter and healthy demand momentum in the banking and financial services segment.
The company's revenue for the quarter is also expected to benefit from cross-selling to clients of Cigniti Technologies. During the March quarter, the company had signed a $62-million deal with one of the top three clients of Cigniti. Coforge had taken over Cigniti's operations in July 2024. In December, Coforge's board had approved the merger of Cigniti Technologies with the company.
The company's consolidated earnings before interest, taxes, depreciation, and amortisation for the June quarter is expected to be INR 6.46 billion, according to the average of estimates from six brokerages. The company had reported an adjusted consolidated EBITDA of INR 6.36 billion in the previous quarter and INR 4.29 billion a year ago.
The company's EBIT margin for the quarter is expected to be 13.4-13.6%, according to estimates from six brokerages. This indicates an increase of 20-40 basis points from the March quarter's EBIT margin of 13.2%. The company's EBIT margin for the June quarter is expected to be supported by a decline in depreciation and amortisation expenses and lower cost related to allotment of employee benefit plans, HSBC said in an earnings preview report.
Revenue growth and lower pass-through revenues in the quarter are also expected to boost the company's EBIT margin for the reporting quarter, analysts said. However, visa costs and investments made in talent and in large deal ramp-ups are expected to limit further improvement in the company's margin.
The company's order book is expected to remain healthy during the June quarter, driven by deals in the banking and financial services segment, ICICI Securities said. Similarly, Kotak Equities said it "expects another quarter of strong deal signings even as it may be lower than numbers in the March quarter that included $1.6 bn from Sabre deal".
Coforge will announce its June quarter earnings Wednesday. Analysts expect investors to focus on the management's commentary on demand trends across the banking and financial services, insurance, manufacturing, and travel verticals and the pace of recovery in discretionary spending by clients. The revenue and margin outlook for the financial year 2025-26 (Apr-Mar) and updates on the $2-billion revenue target for FY27 will be key factors to monitor.
Investors will also watch for management commentary updates on the large deal with Sabre Corp., benefits from cross-selling to Cigniti's clients, and adoption of generative artificial intelligence. Further, management commentary on the impact of delayed wage hikes and margin resilience amid investments will also be monitored, IDBI Capital Market Services said.
Tuesday, shares of Coforge ended 0.9% lower at INR 1858.40 on the National Stock Exchange. The stock has risen nearly 24% since the company announced its March quarter earnings on May 5, but has fallen over 7% from its all-time high of INR 2,005.36 hit on Dec. 30. Of the 17 brokerage reports on the stock available with Informist, 15 have a "buy" or equivalent rating with an average target price of INR 1,904. The remaining two have a "hold" rating on the stock.
Following are the June quarter earnings estimates for Coforge, in INR million, based on reports from 14 brokerages in descending order of net profit:
| Brokerage | Net Sales | Net Profit | EBITDA | Revenue ($ mln) | % EBIT margin |
|---|---|---|---|---|---|
| Motilal Oswal Financial Services Ltd. | 37,450.00 | 3,848.00 | 6,741.00 | -- | -- |
| JM Financial Institutional Securities Pvt. Ltd. | 37,434.00 | 3,766.00 | 6,306.00 | -- | -- |
| Kotak Institutional Equities | 37,561.00 | 3,609.00 | 6,350.00 | 439.00 | 13.4 |
| Sharekhan Ltd. | 37,670.00 | 3,580.00 | -- | -- | -- |
| Nirmal Bang Equities Pvt. Ltd. | 37,546.00 | 3,572.00 | -- | 429.00 | 13.4 |
| Dolat Capital Market Pvt. Ltd. | 37,806.00 | 3,413.00 | -- | -- | -- |
| Antique Stock Broking Ltd. | 37,435.00 | 3,357.00 | 6,584.00 | -- | -- |
| Nuvama Wealth Management Ltd. | 37,643.00 | 3,326.00 | 6,275.00 | 440.00 | 13.4 |
| Elara Securities (India) Pvt. Ltd. | 36,742.00 | 3,321.00 | -- | 427.00 | -- |
| IDBI Capital Market Services Ltd. | 37,407.00 | 3,291.83 | -- | 437.00 | 13.5 |
| Emkay Global Financial Services Ltd. | 37,580.00 | 3,243.00 | 6,501.00 | -- | -- |
| ICICI Securities Ltd. | 37,209.00 | 3,111.00 | -- | 435.60 | 13.6 |
| Indsec Securities and Finance Ltd. | 35,200.00 | 3,100.00 | -- | 400.00 | 13.5 |
| HSBC Global Research | 36,940.00 | 2,926.00 | -- | 432.00 | -- |
| Average | 37,258.79 | 3,390.27 | 6,459.50 | 429.95 | -- |
End
US$1 = INR 86.36
Edited by Rajeev Pai
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