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Informist, Thursday, Jul. 23, 2026

 

By Shakshi Jain

 

NEW DELHI – Coforge Ltd. is expected to post a moderate sequential decline in its consolidated net profit for the June quarter, despite a rise in revenue, owing to acquisition costs and artificial intelligence-related investments. Revenues of the company are expected to rise on the back of the contribution from recently integrated artificial intelligence firm Encora Digital LLC, brokerages said.

 

The digital solutions provider's consolidated bottom line for the June quarter is expected to fall almost 12% sequentially to INR 5.42 billion, according to the average of estimates from 16 brokerages. Excluding the exceptional item reported for the March quarter, the company's net profit for the June quarter is likely to fall almost 19%. However, this would mean almost doubling of the net profit on a year-on-year basis. The bottom line estimates range from INR 4.89 billion by JM Financial Institutional Securities Pvt. Ltd. to INR 6 billion by Nuvama Wealth Management Ltd.

 

The Noida-based firm's consolidated revenue for the June quarter is expected to grow almost 17% sequentially and nearly 41% on year to INR 51.93 billion, as per the average of 16 estimates. The highest top line estimate is INR 56.79 billion from ICICI Securities Ltd. and the lowest is INR 45.9 billion from Nirmal Bang Equities Pvt. Ltd.

 

For the March quarter, Coforge had reported a consolidated net profit of INR 6.12 billion on revenues of INR 44.5 billion. In the absence of the one-time cost of INR 536 million reported for the quarter, the company's bottom line would have added up to INR 6.66 billion, the change in tax notwithstanding.

 

In constant currency terms, sales are expected to grow 20-23% sequentially for the June quarter, according to estimates from six brokerages. An overwhelming majority of this growth is estimated on the back of two-month contribution from Encora Digital, as per commentary from brokerages. Analysts expect organic revenues to stay flat on a sequential basis. Coforge had planned to wind up a low-margin business portfolio in India, the negative impact of which was expected to flow into the financials for the June quarter.

 

For the full picture, Indsec Securities and Finance Ltd. has a slightly more conservative estimate of constant currency sales growth for the June quarter at 10-15%.

 

"Coforge may post flat QoQ revenue growth in USD terms, due to its exit of the India business, which contributed ~USD 20mn ($20 million) revenue in the past two quarters," Elara Securities said. Excluding this impact, ICICI Securities estimates organic revenue growth for the June quarter at 3% in constant currency terms.

 

Coforge had a 12-month executable order book of $1.75 billion at the end of the March quarter.

 

The company had announced the closure of Encora acquisition in April with the financial consolidation effective May 1.

 

In dollar terms, the company's revenue is expected to rise to $520.04 million for the June quarter from $489.1 million in the March quarter, according to the average of 12 estimates. Emkay Global Financial Services Ltd. anticipates a (-) 20 basis point cross-currency impact on the company's dollar revenues for the June quarter and JM Financial estimates (-) 40 bps of pressure.

 

ICICI Securities estimates $112 million in contribution from Encora Digital for the June quarter. 

 

Centrum Broking expects the company to report deal wins in the $600 million - $650 million range for the reporting quarter. "Coforge has been reporting TCV of over US$500mn for 7 consecutive quarters now, and we expect this trend to continue in 1QFY27, as it has indicated that the deal momentum is expected to remain robust," Nirmal Bang Equities said.

 

If analysts' consensus estimates for the June quarter hold, the company's bottom line will revert to a sequential decline after more than doubling in the trailing quarter. Its revenue, on the other hand, will rise at the fastest sequential pace in eight quarters.

 

MARGIN MOVEMENT

Coforge's earnings before interest and tax margin for the June quarter is expected to contract 90 bps sequentially to 15.7%, according to the average of 13 estimates. Analysts listed multiple reasons for this, including weak operating leverage on flat revenues, amortisation charges on account of the Encora acquisition, higher interest costs due to the debt taken to fund the takeover, integration-related expenses, and loss from cash flow hedges. "We forecast FX loss of Rs 400 mn, which will impact overall profits," Kotak Securities said.

 

Coforge will announce its June quarter earnings on Monday. Investors await the management's comments on order bookings, deal pipeline, levers for margin expansion, and impact of the West Asia war. Market participants will also watch out for details regarding the synergy benefits from integration of Encora Digital, expected revenue deflation due to AI, demand across segments, ramp up of large deals, and change in hiring plans, if any.

 

Kotak Securities listed capital allocation priorities, including potential recalibration of dividend payout to accelerate deleveraging, and trends in long-duration unbilled revenues among other details investors will watch out for.

 

Coforge is targeting expansion of 110 bps  year-on-year in its consolidated EBIT margin for 2026-27 (Apr-Mar) at 15.5%, and barring the contribution from Encora Digital, the standalone metric would be 16.5–17%, the management had said in the conference call with analysts post the March-quarter earnings announcement.

 

At 1326 IST, shares of Coforge traded almost 2% lower at INR 1,443.40 on the National Stock Exchange. The stock is up over 23% since the company reported its March quarter results. It is down more than 27%% from its 52-week high of INR 1,989.7, recorded on Dec. 8. 

Of the 16 research recommendations on Coforge available with Informist, 13 have a 'buy' or equivalent recommendation on the stock, and three have a 'hold' or equivalent call. The average target price of the 'buy' recommendations is INR 1,798, and that of the 'hold' calls is INR 1,582. This is almost 25% and 10% higher than the current market price, respectively. 

 

Following are the Apr-Jun earnings estimates for Coforge from 16 brokerages in descending order of the estimate of net profit in INR billion:

 

Broking firm	Net sales	Net profit	Revenue ($ mln)	EBIT (%)
Nuvama Wealth Management Ltd	56.10	6.00	593	15.5
Centrum Broking Ltd	56.36	5.86		15.8
Nomura Equity Research	54.11	5.73	588	16.2
ICICI Securities Ltd	56.79	5.72	600.9	15.6
Emkay Global Financial Services Ltd	56.68	5.71
Prabhudas Lilladher Pvt Ltd	56.20	5.70	593.6	16.2
Bank of America global research	55.40	5.45
Kotak Securities Ltd	55.67	5.34	588	15.5
IDBI Capital Market Services Ltd	55.54	5.33	587	15.5
Indsec Securities and Finance Ltd	51.00	5.30	537	14.2
Axis Securities Ltd	46.43	5.26		15.3
PhillipCapital (India) Pvt Ltd	46.42	5.18	490	16.5
Motilal Oswal Financial Services Ltd	46.03	5.09	486	16.3
Elara Securities (India) Pvt Ltd	45.98	5.06	489
Nirmal Bang Equities Pvt Ltd	45.90	5.04	499	15.1
JM Financial Institutional Securities Pvt Ltd	46.23	4.89	189	16.5
Average	51.93	5.42	520.04	15.71

 

End

 

US$1 = INR 96.53

 

Edited by Avishek Dutta

 

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