Coforge Q2 Review: Target Price Hiked By Three Top Brokerages — Here's Why
Much of the optimism surrounding Coforge is regarding the management, which highlighted that the demand has 'improved somewhat' and that growth in the second half of the financial year will be robust.
Coforge Ltd. shares will be in focus on Monday as Jefferies, JPMorgan and Morgan Stanley have all hiked target price after the company reported its September quarter earnings for the financial year ending March 2026.
All three brokerages have cited strong performance for the company in the September quarter, including robust deal wins and improved margin execution.
JPMorgan maintained an 'overweight' rating on Coforge while hiking target price from Rs 2,400 to Rs 2,500. Jefferies, meanwhile, retained a 'buy' rating with an upgraded target price of Rs 2,180 versus Rs 2,030.
Morgan Stanley has also maintained an 'overweight' rating on Coforge while hiking target price from Rs 1,800 to Rs 2,030. The stock closed at Rs 1,760, meaining there could be an upside of up to 36%.
During the September quarter, Coforge's consolidated net profit rose 18% sequentially to Rs 375.80 crore. The IT major's revenue during the second quarter rose 8.1% to Rs 3,985.70 crore in the July-September period, as against Rs 3,688.60 crore over the last quarter.
Much of the optimism surrounding Coforge is regarding the management, which highlighted that the demand has 'improved somewhat' and that growth in the second half of the financial year will be robust.
The optimism in Coforge is backed by a strong deal pipeline, with Jefferies noting the company signed 10 large deals in the first half of the year, compared to 14 in all of the previous fiscal year.
Another key factor driving a positive sentiment on Coforge is the company's fiscal discipline, with the company delivering on cashflow and margins in Q2, which is a significant improvement, as per JPMorgan.
Morgan Stanley and JPMorgan also pointed out Coforge's pledge to maintain a 14% minimum EBIT margin threshold in FY26. Morgan Stanley believes this is the 'right approach', with the company intending to prioritise revenue growth more aggressively after meeting that goal.
Jefferies, meanwhile, raised its earnings estimates for Coforge by 2-5% and now expects a 20% earnings per share (EPS) compound annual growth rate.
