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IDBI Capital Report
Coforge Ltd.'s Q3 USD revenue growth was better than peers but lower than guidance of the company. However, the company has maintained its growth guidance of 13-16%. Considering macro uncertainty, slowdown in deal conversion, soft Q3 and robust expectation from Q4 we have assumed that the company would be at the lower end of the guidance for FY24E.
Coforge's ability to win large deals in this environment (15.8% YoY increase in executable order) we have assumed ~15% YoY & 17% YoY growth in FY25E and FY26E and 223 basis points increase in Ebit margins over FY24E-FY26E.
However, considering recent run up in price we maintain 'Hold' rating on the stock with revised target price of Rs 6,130 (26 times FY26E earnings per share, introducing FY26E estimates, previous target price Rs 4,913).
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