Coforge Share Price Jumps 10% After Strong Q4 Results, Brokerages Positive on Earnings Visibility

The share price of Coforge jumped 10% in early trade today (May 6) after the company announced its March quarter (Q4) results on May 5. Both Nuvama and Motilal Oswal are positive on the stock, highlighting strong earnings visibility, improving margins, and a healthy deal pipeline. While Nuvama sees a potential upside of up to 88% with a target price of Rs 2,200, Motilal Oswal has also maintained a ‘Buy’ rating with a target of Rs 1,800, implying around 54% upside from current levels. Let’s take a look at the brokerages take on this stock – According to the Nuvama report, Coforge delivered a solid operational performance in the fourth quarter. “Revenue was $489 million, +2% QoQ, in-line with our estimate of +2% QoQ. EBIT margin expanded 230bp QoQ to 16.6%, significantly beating estimates,” added the brokerage in its report. Profit performance also remained strong. “Adjusted PAT of Rs 470 crore was above our estimate of Rs 430 crore too.” The brokerage also highlighted strong future visibility backed by order wins. Further, the brokerage added, “12-month executable order book was strong at USD 1.7 billion (+16.4% YoY).” According to the brokerage report, deal momentum continued to support growth. The company signed multiple large deals during the quarter, taking total deal wins for the year to a higher level. The report added, “Order intake was stable at $648 m (+9.3% QoQ/-69.5% YoY) with a strong 12-month order backlog of $1,752 million (+2% QoQ/+16.4% YoY).” This provides visibility into future revenue, even as some segments like banking, financial services, and insurance (BFSI) remained weak in the near term. However, management expects recovery in these segments going forward. One of the key takeaways from the Nuvama report is the company’s shift in strategy. Nuvama noted, “With adequate growth comfort, Coforge is now chasing higher profitability, cashflows, striving to make the business fundamentally superior.” The brokerage has also revised its earnings estimates upward. “We are revising FY27E/28E EPS (+7.5%/+8.0%)…Retain ‘Buy’ with a target price of Rs 2,200.” Motilal Oswal in its report added that structural changes in the business are expected to improve profitability over time. One such step is the exit from the India government pass-through business, which could impact short-term growth but improve margins. The report noted, “Exiting the India pass-through business improves working capital as well as margin profile.” Another important trigger is margin guidance. “EBIT margin guidance receives a meaningful upgrade…at least 100-150bp above our earlier estimates.” Motilal Oswal also pointed to increasing demand for artificial intelligence-led services. According to the brokerage report, “Demand is shifting from experimentation to production-grade deployments with a focus on agent orchestration, enterprise workflows and managed services around AI systems,” noted the brokerage house. The brokerage remains positive on valuations as well. “We continue to view Coforge as a structurally strong mid-tier player…We value Coforge at 26x FY28E EPS with a target price of Rs 1,800.” Going forward, key factors to watch include the recovery in the BFSI segment, execution of large deals, margin expansion, and growth in AI-led services. According to the brokerage reports, Coforge may continue to see short-term volatility, but earnings visibility and order book strength are set to support the long-term outlook.