Coforge Shares Surge In Trade After Strong Q2 — Check 12-Month Target Price
Along with a strong set of results, there was optimistic commentary from the management, put to rest all concerns pertaining to margins and cash flows.
Shares of Coforge have seen a strong upmove in trade on Monday, with the stock gaining more than 5% and reaching an intraday high of Rs 1,865, after posting a strong set of numbers for the September quarter on Friday and optimistic management commentary.
The stock is currently trading at Rs 1,857, compared to Friday's closing price of Rs 1,760.
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.
Operating income, or earnings before interest and taxes, rose 34% sequentially to Rs 560.60 crore. The margin expanded to 14.1% versus 11.3%.
In addition, the IT firm's order intake for the quarter stood at $ 514 million with five large deals signed across North America and APAC.
Executable order book over next twelve months stood at $1.63 billion. This is 26.7% higher than the last year.
Along with a strong set of results, there was optimistic commentary from the management, put to rest all concerns pertaining to margins and cash flows.
This has ultimately led to a re-rating from a range of top brokerages, with all of them hiking target price for the counter.
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 the target price from Rs 1,800 to Rs 2,030. The stock closed at Rs 1,760, meaning there could be an upside of up to 42%.
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.
