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Informist, Tuesday, Jul. 28, 2026

 

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--Coforge: Hope to sign many large deals Q2, comparable to full year numbers 
--CONTEXT: Comments by Coforge management in post-earnings analyst concall 
--Coforge: Customer AI conversations maturing, creating new opportunities 
--Coforge: Next phase of AI to be about application, not access 
--Coforge: Confident of achieving guided EBITDA margin of 20.5-21% in FY27 
--Coforge: On track to meet FY27 standalone EBIT margin aim of 16.5-17% 
--Coforge: Undertook wage hikes for highly select group in Q1 
--Coforge: May not roll out wage hikes at broad level in FY27 
--Coforge: Encora portfolio order intake Q1, pipeline robust

 

By Shakshi Jain and Shruti Nair

 

NEW DELHI/MUMBAI – Coforge Ltd. expects to sign a record number of large deals in the ongoing quarter, which would be comparable to a recent full-year number, Chief Executive Officer Sudhir Singh told analysts in a post-earnings conference call Tuesday. He also expressed confidence in achieving the guided financial targets for financial year 2026-27 (Apr-Mar)–-consolidated earnings before interest, tax, depreciation, and amortisation margin of 20.5-21%, standalone earnings before interest and tax margin in the 16.5-17.0% range, and a consolidated EBIT margin of 15.5% or higher.

 

"Our pipeline of large deals in Q2 (Jul-Sept) and beyond has never been stronger than it is today. In Q2 itself, the quarter we are in, one month has elapsed, we believe that we are likely to sign large deals in numbers that will be very close to what we signed in the full year just three years back," Singh said.

 

The $230-million deal announced by Coforge last week could likely be a part of the total contract value for the ongoing quarter. "...the ramp up has already initiated on that and that is expected to add an additional 20 to 30 teams," a top company executive said.

 

Coforge Friday informed exchanges that it will combine modern low-code/no-code platforms with artificial intelligence-led automation and AI-infused software development practices to transform business operations for a European client for $230 million. The company has signed a five-year contract for this. 

 

According to the management, the company's client base has broadened after integration of the Encora business, which also registered a robust order intake in the June quarter and enjoys a healthy deal pipeline. "At this time, we know that Encora will create exceptional business value and synergy, in line with what Cigniti, SLK Global...did," Singh said.

 

The management estimates marginal costs in relation to the integration of Encora for the ongoing quarter. 

 

Among other items impacting the bottom line, the management said Coforge has mark-to-market losses worth $14 million on account of outstanding hedges, which will be realised over two quarters. "From Q4 (Jan-Mar) onwards, we anticipate a positive impact of $10 million in our earnings as the hedge process will be eliminated because of no open book beyond Q3 (Oct-Dec) from our perspective."

 

Hedge losses incurred in the June quarter added up to $10 million. The company also rolled out wage hikes for a highly select group of employees in the quarter. However, the management expressed the possibility of no salary increments at a broader level in FY27. "...We may not have hikes in the current fiscal and if we do at a broad level, it's not going to be before quarter four," it said.

 

Commenting on the broader AI landscape, Singh said conversations with clients are changing – customers are moving enquiring about operationalisation and governance of AI from deployment-related queries earlier. "We believe this next phase of AI will not be won through access to models...The differentiator will be applied AI. AI grounded in the business context," he added.

 

 

The company's consolidated net profit fell 15% on quarter but rose over 63% on year to INR 5.19 billion for the June quarter. Consolidated revenues from operations increased 24% on quarter and 49% on year to over INR 55 billion for the three months. In dollar terms, the top line added up to $592.2 million and over $100 million of this comprised sales from the Encora business.

 

The information technology player's consolidated EBITDA margin stood at 20.3% for the June quarter, down 28 basis points on quarter. Its consolidated EBIT margin fell to 16% from 16.6% a quarter ago.

 

At 1102 IST, shares of Coforge traded 9.4% higher at INR 1,671.70 on the National Stock Exchange.  End

 

US$1 = INR 95.72

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

 

Edited by Akul Nishant Akhoury

 

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