Coforge Q2 Review: Brokerages Raise Targets As Record Deals Lift Margin Outlook

Coforge Ltd.'s September-quarter revenue fell short of expectations, but record deal bookings and an improved margin outlook helped sustain broker confidence in its growth prospects. The company signed deals worth $1.04 billion in total contract value during the quarter, its highest-ever quarterly intake, and raised its EBIT margin guidance to 16% from 15.5% earlier. Jefferies, Kotak Securities and JPMorgan raised their target prices, while Citi maintained Sell, citing muted organic growth trends and the need to monitor executable order book growth.

The record deal intake and higher margin guidance were key positives for analysts. The next 12-month order book stood at $2.38 billion, while quarterly deal wins increased 50.6% from $691 million in Q1FY27. Jefferies retained Coforge as its top pick in the sector, while JPMorgan also named it its preferred IT stock. Citi remained cautious, pointing to below-expectation revenue and muted organic growth trends across the sector.

Coforge Q2 Highlights (QoQ)

• Revenue rose 11.61% sequentially to Rs 6,170 crore from Rs 5,527.7 crore.
• EBIT increased 11.59% sequentially to Rs 984.5 crore from Rs 882.2 crore.
• EBIT margin was unchanged at 15.95%.
• Net profit rose 13.4% sequentially to Rs 588.1 crore from Rs 518.6 crore.
• Constant-currency revenue growth stood at 10.1%, below the estimated 13%.
• Organic constant-currency growth was 3.8%, in line with expectations.
• The company signed eight large deals worth $1.04 billion in total contract value, its highest-ever quarterly intake.
• The next 12-month order book stood at $2.38 billion.

Here's what brokerages are saying after Coforge announced Q2 results

Jefferies

• Maintained 'Buy'; Target Price Raised To Rs 2,230 From Rs 2,040
• Retained Coforge as its top pick in the IT services sector.
• Highlighted steady growth and an improving margin outlook.
• Expects organic constant-currency revenue and earnings per share to grow at compound annual growth rates of 14% and 26%, respectively.
• Said strong earnings delivery could sustain stock outperformance despite a 56% rally over the previous six months.
• Raised earnings per share estimates by 3–5%.

Citi

• Maintained 'Sell'; Target Price Raised To Rs 1,750 From Rs 1,670
• Said Q2 revenue was below expectations.
• Noted that management remained confident about margin expansion.
• Flagged organic executable order book growth and cash conversion trends as key monitorables.
• Said growth trends across the sector remained muted, with low-single-digit year-on-year organic growth.

Kotak Neo

• Maintained 'Buy'; Fair Value Raised To Rs 2,300 From Rs 2,000
• Said record bookings provided comfort on the sustainability of growth.
• Highlighted record deal wins, a higher margin outlook and healthy cash conversion expectations as factors that more than offset the revenue miss.
• Described Coforge as a well-run challenger that had strengthened its AI capabilities rapidly and was well placed to gain wallet share.
• Raised FY27–FY29 earnings per share estimates by 2–7% and rolled over its valuation to September 2028 estimates.

JPMorgan

• Maintained 'Overweight'; Target Price Raised To Rs 2,150 From Rs 1,850
• Retained Coforge as its top pick in the IT sector.
• Expects growth momentum to continue alongside margin expansion.
• Said revenue growth was below consensus due to softness at Encora.
• Expects EBIT margins to increase by 40–100 basis points over FY27–FY29.
• Raised FY28–FY29 earnings per share estimates by 3%, while cutting FY27 estimates due to foreign exchange losses.

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