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Informist, Tuesday, Dec. 9, 2025

 

MUMBAI – Coforge Ltd. will stop giving revenue and margin guidance from 2026-27 (Apr-Mar), according to brokerages that attended the company's investor day on Monday. The company told brokerages that it expects to reach a revenue run rate of $2 billion by the March quarter, implying growth of over 38% compared with its consolidated revenue in FY25.

 

While the company refrained from providing margin guidance, it said the earnings before interest and tax margin would remain above 14% going forward. In its latest quarterly earnings, the company reported a consolidated EBIT margin of 14% for the September quarter.

 

The company was confident it could maintain the 14% margin, but brokerages expect it will take time for the full-year margin to reach 14%. "... we believe that in the current demand environment, margins could be at risk," Motilal Oswal Financial Services said. Coforge's consolidated EBIT margin in FY25 was 13%.

 

Most brokerages expect the company's FY26 margin to fall short of guidance. Motilal Oswal, Nuvama Wealth Management, and ICICI Securities expect FY26 EBIT margins of 13.3-13.8%, with improvement to around 14% only in FY27 or FY28.

 

Coforge's management said the market was challenging for companies that wait for 'Request for Proposal' for orders. At the same time, companies designing client-specific solutions using new technologies were better positioned. Given this, Coforge aims to be proactive in getting deals and close 20 large deals in FY26. Out of the 20 planned, the company has already closed 10 large deals in the first half of FY26.

 

The company plans to focus on existing operations and is not looking to add any new verticals or expand into new geographies for at least 3-5 years. The company is also not interested in investing more in data centres.

 

It is conservative on new acquisitions and primarily wants to buy companies to gain clients rather than to add capability, brokerages said. Furthermore, the company is interested in businesses that can immediately increase earnings per share.

 

It expects the travel vertical to continue to support growth, as airlines are expected to invest heavily in technology over the next decade, brokerages said. The company already serves 60 airlines globally, which are expected to spend $1-2 billion each on modernisation over 10-15 years.

 

Coforge expects travel segment spending to grow 6-7% in FY26, up from the earlier 3-4% forecast. The company's travel, transportation, and hospitality segment reported an over 61% on year increase in the September quarter.

 

Among other segments, the company sees an opportunity in healthcare, as clients in the US are unhappy with the current service providers. "Opportunity is available in sub-segments, such as payers (enrolment platform), med-tech (medical devices), life sciences (clinical imaging platform) and in the electronic health records (EHR) space," Elara Securities said in its report.

 

The company earns the highest revenue from North America, but the market still remains underpenetrated compared to peers, brokerages said. The company sees an opportunity in the US and plans to expand its presence in the West and Midwest, focusing on increasing sales across the Hi-Tech, retail, and manufacturing verticals.

 

Coforge also sees opportunity in its banking and financial services vertical, which contributed nearly 30% to its revenue in the September quarter. The banking segment is likely to win orders from clients shifting budget to compliance and risk management due to tighter regulations.

 

The banking vertical is also likely to benefit from adopting artificial intelligence. However, the company noted that clients are prioritising faster delivery of value and outcome-based pricing for AI-led projects.

 

Brokerages were largely positive on Coforge after the investor day. At least five brokerages maintained their 'buy' or equivalent rating following management's comments, with an average target price of INR 2,274 per share, implying a 21% upside from the stock's Tuesday closing price.

 

Brokerage Motilal Oswal was extremely bullish on the stock and raised its target price by 25% to INR 3,000 per share, the highest among the five brokerages. The new target price implies a more than 60% increase in Coforge's share price. End

 

Reported by Anshul Choudhary

Edited by Saji George Titus

 

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