Coforge Q4 Results Review - Strong Revenue Growth Amid Macro Challenges: IDBI Capital

IDBI Capital Report

Coforge Ltd. reported strong growth in Q4 due to healthy order book. However, challenging macro has led to slowdown in executable order book leading to 17% YoY growth in FY24 versus 20% YoY growth in last year. This we believe indicates slowdown in revenue growth.

We have factored in 10% YoY growth in organic business in FY25E. This coupled with acquisition of Cignity (expected to be completed by Q2 FY25E) we have factored in US$ revenue growth of 19% YoY and 25% YoY in FY25E and FY26E respectively.

Hence, we expect profit after tax and earnings per share to grow at a compound annual growth rate of 35% & 27% over FY24-FY26E. However, on like to like basis we expect EPS to grow at a CAGR of 15%.

Further, considering weak revenue profile of acquired company we maintain our Hold rating on the stock with a revised target price of Rs 5495 (25 times FY26E EPS).

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