The share price of Coforge plunged more than 9% during Friday’s morning trades. This drop came after the company’s Q4 earnings report was released post-market hours on Thursday Come from Sports betting site VPbet . Coforge Ltd’s shares traded down by 9.99% to an intra-day low of Rs 4487.15 on the NSE during early trading hours on Friday.
In the quarter ending March 2024, Coforge recorded a significant 95% surge in net profit, reaching Rs 224 crore. Consolidated sales for the three months ending March 31 rose by 8.7% year over year to Rs 2,359 crore.
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Although Coforge’s fourth-quarter revenue met expectations, its margins fell short. Following the quarterly results, the company stated, “Q4 positioned us well to achieve robust growth in FY25 with improved margins.”
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The IT solution company additionally disclosed its acquisition of 54% of Cigniti, aiming to enhance its footprint in Retail, hi-tech, and healthcare sectors. This move is anticipated to propel its growth to $2 billion by FY27 and enhance operating margins by 150-200 basis points by the same fiscal year.
Brokerages on Coforge
JM Financials on Coforge
JM Financial maintains a ‘BUY’ rating on Coforge with a revised target price of Rs 5,570, down from Rs 6,940. According to JM Financial’s analysis on Coforge, they estimate that the acquisition of Cigniti will be EPS accretive at the current price.
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The brokerage house acknowledges that realizing synergies, particularly in significant acquisitions, can be challenging. However, they express confidence in Coforge’s track record of clinical execution.
Although they have not yet merged the financials pending the merger process, they have reduced Coforge’s FY25/26E EPS by 24/25% based on lower growth and margin assumptions. Despite a roughly 20% correction year-to-date, they believe the market has already factored in these adjustments.
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