CLSA has initiated coverage on Coforge Ltd., issuing an 'outperform' rating by highlighting the company's 'able leadership' and strong execution under the current management.
The brokerage firm issued a target price of Rs 2,346, which implies an upside of over 50% from yesterday's closing price of Rs 1,547.
CLSA stressed that Coforge – one of India's top 10 IT firms – has an able leadership, well incentivised with ESOPs and a strong track record. The company has also seen strong execution under current Chief Executive Officer Sudhir Singh.
The management's focus on building domain expertise, coupled with a consulting mindset, has been central to the company's growth, CLSA added.
Coforge has also built a strong order book and earnings trajectory, with CLSA projecting FY26–28 revenue, EBIT, and EPS CAGRs of 15%, 16%, and 22%, respectively.
What sets Coforge apart is the company's ability to combine deep client relationships with domain expertise.
In fact, five of the company's ten clients have grown at a 15% CAGR over FY18-25. This is followed by the financial services and travel verticals, which have grown at 20% and 12% CAGR, respectively.
CLSA adds that Coforge has also built niche expertise by working closely with partners such as Duck Creek and Guidewire in insurance and automation platforms like Pega and Mendix.
Additional positives for Coforge include a strong governance framework and high ESG scores. CLSA believes the company is well-positioned to gain from structural IT demand, even though the industry has faced a myriad of macro issues in the recent past.
“With its industry-leading order book, consistent strategy and strong leadership, Coforge is on track to deliver healthy growth,” CLSA wrote in the report.
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