- Coforge is positioned to withstand financial risks with key client Sabre Corp, says CLSA
- CLSA maintains outperform rating and Rs 2,426 target price on Coforge shares
- Coforge's $1.56 billion contract with Sabre runs through March 2025 amid client risks
Coforge is well-positioned to weather the financial vulnerabilities with its key client Sabre Corp, according to global brokerage firm CLSA, which has maintained a bullish call on the counter and sees an upside of up to 77%.
In its latest note, the firm has maintained a 'high-convinction outperform' rating on the midcap IT counter. CLSA has kept its target price at Rs 2,426, citing robust execution from the company's robust execution capabilities and its strategic pivot towards artificial intelligence-driven solutions.
The central focus of CLSA's note is Coforge's $1.56 billion contract signed with Sabre, a global travel marketplace, in March 2025. The firm is facing significant financial headwinds, including a solvency risk and severe leverage, with more than 90% of its debt maturing in 2029, even at a time when the company continues to burn cash.
Despite the headwinds, CLSA notes that Sabre's 2026 guidance aligns with Wall Street expectations, forecasting mid-single-digit revenue growth and negative free cash flow.
The brokerage firm added that Coforge, for its part, has implemented several measures to mitigate risk and protect itself, including securing a credit insurance policy against unforeseen events. Moreover, the company's acquisition of AI-form Encora is expected to dilute its revenue exposure to Sabre from 6% to 4.9%, thus elevating Coforge to a $2.7 billion revenue run-rate entity.
Moving away from a traditional client-vendor dynamic, Coforge is also expanding its relationship with Sabre into a collaborative partnership, unlocking new cross-selling opportunities, including a $20 million deal which is currently in the works with an existing Sabre client.
Looking ahead, the brokerage firm anticipates Coforge will be a net beneficiary of the AI wave. Sabre executives highlighted significant AI integration within their own platforms - a development that might generate additional volume opportunities for vendors such as Coforge.
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