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Informist, Tuesday, May 5, 2026

 

--Coforge: Addressable wallet to increase as Encora integration complete 

--CONTEXT: Coforge management's comments in post-earnings call with analysts 

--Coforge: Expect EBIT margin of 16.5-17.0% excluding Encora in FY27 

--Coforge: Agentic AI will create massive managed services layer for IT cos 

--Coforge: See AI-led modernisation surge, agent deployment wave near term 

--Coforge: Expect travel vertical revenue to be flat in Apr-Jun QoQ 

--Coforge: See structural demand drivers in banking, fincl svcs vertical 

--Coforge: Expect banking, fincl svcs performance to improve in FY27 

--Coforge: Hi-tech vertical to start growing handsomely in Apr-Jun

 

By Shakshi Jain and Eshitva Prakash

 

NEW DELHI/MUMBAI – Coforge Ltd. is targeting expansion of 110 basis points year-on-year in its consolidated earnings before interest and tax margin for 2026-27 (Apr-Mar) to 15.5%, a top company executive said in a post-earnings conference call with analysts Tuesday. Barring the contribution from the recently acquired artificial intelligence firm Encora, the standalone metric would be 16.5–17%, the executive added. 

 

The company is also confident of clocking a consolidated earnings before interest, tax, depreciation, and amortisation margin of 20.5–21.0% in FY27. The EBIT margin for the ongoing financial year will be reflective of the exit rate for FY26, rather than the full year performance, Coforge had said in a presentation to investors, released before the conference call.

 

Coforge's EBIT margin in the last quarter of FY26 expanded 231 bps sequentially to a record quarterly high of 16.6%. The company signed five large deals during the three months to register an order intake of $648 million. "...Client set, the addressable wallet is going to expand now that Encora integration is complete," the company executive said. 

 

Overall, the mid-cap information technology company's consolidated net profit jumped nearly 145% sequentially to INR 6.12 billion in the March quarter, bolstered by a sizeable reversal of deferred tax liabilities. Its revenue from operations grew a little over 5% on quarter to INR 44.50 billion. 

 

For FY26, the company reported a consolidated net profit of INR 15.56 billion, up nearly 92% from a year ago. Its revenue for the year was INR 164.03 billion, up nearly 36% on year. 

 

In dollar terms, among the company's larger revenue-generating verticals, banking and financial services grew 12% on year in FY26, travel, transportation and hospitality grew 62%, and hi-tech nearly doubled. The company's management attributed the relatively softer growth in the banking and financial services segment to a client-specific issue. "One of our top three banking clients did not grow this year. That client account has now been transferred...," the management said, adding that it expects a year-on-year improvement in the vertical in FY27 amid visibility of structural demand drivers. 

 

For the travel vertical, the management said it remains positive on growth despite the challenges emerging for the airline industry amid the West Asia war. The company, however, plans to immediately wind up a low-margin portfolio within the segment in India, the negative impact of which will flow into the financials for Apr-Jun. "We expect to be flattish in Q1 (Apr-Jun) and to be on a very fast growth trajectory from Q2 (Jul-Sept) onwards."

 

The hi-tech vertical is expected to grow "handsomely" through the year, as per the management.

 

Addressing the argument linked to the delationary impact of AI, a senior company leader said codes generated through AI were cheap to build but expensive to own, secure, and maintain. "Just like cloud migration, agentic AI will create a massive managed services layer."

 

Coforge is prepared to serve the near-term surge in demand for AI-led modernisation and deployment of agents, as per the management.

 

On Tuesday, Coforge's shares ended 1.5% higher at INR 1,168.80 on the National Stock Exchange. The company announced its results after market hours.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

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