Coforge Q3 Results: Net Profit Misses Estimate, Third Interim Dividend Announced

Coforge Ltd.'s consolidated net profit in the October-December quarter missed estimates.

Net profit grew 6.6% sequentially to Rs 216 crore, over the previous quarter's Rs 202 crore. Analysts' consensus estimates compiled by Bloomberg projected a bottomline of Rs 270 crore.

Revenue from operations rose 8.4% from Rs 3,062 crore to Rs 3,318 crore. This compared to the Bloomberg estimate of Rs 3,139 crore. On a year-on-year basis, income rose 42.8%.

On the operating side, earnings before interest and tax rose 9% to Rs 392 crore, compared to an estimate of Rs 382 crore. The EBIT margin was unchanged at 11.8%.

During its post-earnings conference call, Coforge executives said demand for services is primarily driven by the travel, technology, and airline sectors. The company noted that part of its employee stock options vested in January, with additional vesting expected in April, could result in a 150 basis points impact in the first quarter of next fiscal.

The EBIT margin for the quarter stood at 11.8%, with a 100 bps tailwind anticipated due to accounting adjustments, the company said. Looking ahead, Coforge expects its margin to expand to 13.5% by the third quarter of fiscal 2026.

Coforge Business Highlights

Coforge's order intake in the third quarter was $501 million, the second consecutive quarter of $500 million order intake. Four large deals were signed last quarter across North America and ASEAN. The order book executable over next 12 months stood at $1.36 billion at the end of the quarter, a 40% yearly growth.

The company's income from business in the Americas rose 69%, in Europe, Middle East and Africa by 20% and the rest of the world by 3.3% year-on-year.

The Cigniti business delivered 3.5% constant currency sequential growth, while operating margin improved to 17.3%, up from 11% in the year-ago period.

The IT attrition rate stood at 11.9% and global headcount at 33,094 as of Dec. 31, 2024.

Coforge Dividend

The board declared its third interim dividend of Rs 19 per share for the financial year 2025. The record date for determining the eligibility of shareholders for the dividend has been set as Jan. 30.

The payment will be made within 30 days from the date of declaration of dividend.

Coforge's New Acquisition

The company also announced its wholly-owned overseas subsidiary Coforge Inc. to acquire US-based Xceltrait Inc. for around $17.85 million.

Xceltrait is a specialist in the implementation of ServiceNow's Financial Services Operations and Customer Service Management modules and brings deep expertise in the P&C insurance industry. The deal is expected to be completed by Feb. 28, 2025.

Shares of Coforge ended 0.46% lower at Rs 8,223 apiece on Wednesday, ahead of the results. This compared to a 0.57% gain in the benchmark Nifty 50.