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Informist, Tuesday, Jan. 20, 2026

 

By Shakshi Jain

 

MUMBAI – Digital services and solutions provider Coforge Ltd. is expected to report a mid-to-single-digit sequential growth in its consolidated top line for the December quarter, led by a ramp-up of deals secured in the preceding quarters. The company is expected to post a sequential growth for each of its verticals after accounting for furloughs, which traditionally hamper growth of information technology companies in the December quarter. However, the company's consolidated bottom line for the reporting quarter is likely to decline by low single digits sequentially due to wage hikes and foreign exchange losses, according to analysts. 

 

If Coforge's December quarter results are in line with the consensus estimates, it would be the company's slowest sequential revenue growth in three quarters, while its bottom line would decline for the first time in six quarters.

 

The mid-cap company's consolidated revenue for the December quarter is expected to rise nearly 6% sequentially and over 29% on year to INR 42.17 billion, according to the average of estimates from 13 brokerages. The highest top line estimate is INR 42.6 billion by Motilal Oswal Financial Services Ltd. and the lowest is INR 41.25 billion by Nomura Financial Advisory & Securities (India) Pvt. Ltd. 

 

Coforge's consolidated net profit for the reporting quarter is expected to fall nearly 4% sequentially but rise almost 70% on year to INR 3.61 billion, as per the average of estimates. The highest bottom line estimate is INR 4.1 billion by Nirmal Bang Equities Pvt. Ltd. and the lowest is INR 3.38 billion by Kotak Securities Ltd.

 

A ramp up of deals won in previous quarters is expected to support Coforge's revenue growth for the December quarter with furloughs limiting that growth, brokerages said. Moreover, in the trailing quarter, the company's top line included a contribution from the final ramp up of its largest-ever deal--with US-based travel technology firm Sabre Corp.

 

In dollar terms, Coforge is expected to report a revenue of $476.86 million for the December quarter, as per the average of estimates from 11 brokerages. This would be slightly higher than the $462.1 million the company had reported for the September quarter. Estimates for the December-quarter revenue in dollar terms range from a high of $500 million by Indsec Securities and Finance Ltd. to a low of $471 million by Kotak Securities. Analysts expect the company to report a constant currency revenue growth of 2.5-3.5% for the reporting quarter.

 

Most brokerages expect Coforge to report aggregate deal wins of around $500 million for the December quarter, in line with the trend seen in the first two quarters of the 2025-26 (Apr-Mar). Coforge aims to close 20 large deals in the ongoing financial year, with 10 bagged in the first half of the financial year. 

 

MARGIN DIP

 

Coforge's earnings before interest and tax margin for the December quarter is expected to contract sequentially by 80 basis points to 13.2%, according to the average of estimates from 10 brokerages. This is largely on account of the annual salary increments and losses arising from currency fluctuations, according to brokerages. 

 

Analysts estimate anywhere between a 100-200-basis-point impact on the company's EBIT margin for the December quarter on account of wage hikes, which is expected to be partially offset by lower depreciation and amortisation expenses and lower costs tied to the employee stock ownership plan. The depreciation of the rupee against the dollar is also expected to lend support on this front, limiting the EBIT margin contraction for the quarter under review, analysts said.

 

However, analysts have not factored in an impact from the expected increase in provisions for employee benefits, prompted by the new labour codes which came into effect from November. Coforge's large-cap and mid-cap peers have reported considerable one-time costs for the December quarter due to cost increases on account of implementation of the new labour codes. If Coforge has to take a large hit on this account for the December quarter, it could worsen the sequential decline in net profit.

 

The new labour codes mandate that basic pay must account for at least 50% of an employee's total cost to the company. As a result, pay-outs and provisions tied to statutory contributions such as provident fund contribution, gratuity, and leave-related benefits are set to increase for companies.

 

For the September quarter, Coforge had reported a consolidated net profit of INR 3.76 billion on a revenue of INR 39.86 billion. In the year-ago December quarter, the company had generated a consolidated net profit of INR 2.13 billion from continued operations alongside a revenue of INR 32.58 billion.

 

Coforge will announce its December quarter earnings Thursday. Investors await the management commentary on large deal wins, order book, materialisation of deal pipeline, expansion into high-growth artificial intelligence-led services, and levers for margin expansion. Market participants will also watch out for details regarding the progress on acquisition and integration of Encora Digital LLC.

 

Shares of Coforge ended Tuesday at INR 1,693.70 on the National Stock Exchange, down 2% from the previous close. The stock is down 3.8% since the company reported its results for the September quarter. It is also down 15% from its 52-week high of INR 1,994, recorded on Jul. 8.

 

Of the 15 research recommendations on Coforge available with Informist, 10 have a 'buy' recommendation on the stock, while four have a 'hold' and one has a 'sell' recommendation. The average target price of the 'buy' recommendations is INR 2,104 and that of the 'hold' calls is INR 1,925. This is over 24% and nearly 14% higher than the current market price, respectively.

 

Following are the Oct-Dec earnings estimates for Coforge from 13 brokerages in descending order of the estimate of net profit in INR billion:

 

Broking firm	Net sales (in INR bln)	Net profit (INR bln)	Revenue (mln $)	EBIT margin (%)
Nirmal Bang Equities Pvt Ltd	42.08	4.10	475	13.4
Dolat Capital Market Pvt Ltd	42.35	3.88	474	13.9
Indsec Securities and Finance Ltd	42.10	3.70	500	13.3
Motilal Oswal Financial Services Ltd	42.60	3.70	479	13.3
Elara Securities (India) Pvt Ltd	42.37	3.65	476
JM Financial Institutional Securities Pvt Ltd	42.56	3.60
Mirae Asset Sharekhan Ltd	41.96	3.54	472	13.3
Emkay Global Financial Services Ltd	42.05	3.53
ICICI Securities Ltd	42.50	3.53	476.5	13.1
IDBI Capital Market Services Ltd	42.19	3.46	474	12.9
Nuvama Wealth Management Ltd	42.22	3.44	474	13
Nomura Equity Research	41.25	3.43	474	13.1
Kotak Securities Ltd	42.02	3.38	471	13
Average	42.17	3.61	476.86	13.23

 

 

End

 

US$1 = INR 90.97

 

Edited by Tanima Banerjee

 

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