Coforge reported revenue growth of 10.9% for the second quarter of fiscal 2027, driven by a record order intake exceeding $1 billion. The company has raised its full-year EBIT margin guidance to 16%, aiming for 17% by the fourth quarter. Investors are monitoring the company’s ability to integrate its recent acquisition, Encora, alongside AI-driven cost efficiency goals.
Coforge posted growth in its second quarter for fiscal 2027, marked by a surge in large deal wins. The company reported a 10.9% rise in revenue in constant currency terms, with organic growth standing at 3.8%. A standout metric for the quarter was the total order intake, which crossed the US$1 billion mark. This performance pushed the 12-month executable order book to US$2.38 billion, a 45% increase compared to the previous year. The management indicated that this momentum in deal signatures is likely to continue into the third quarter.
Margin Targets and Operational Efficiency
The company has updated its operating margin (EBIT) guidance for fiscal year 2027, raising it to 16% from the previous projection of 15.5%. Looking ahead, management has set a target to reach a 17% margin by the fourth quarter. To achieve these efficiency goals, the company is focusing on AI integration within fixed-price contracts and improving administrative productivity. According to recent data, the company has deployed artificial intelligence agents in 520 client engagements, which is considered a key factor in driving long-term profitability. Utilization rates, which track how much of the new capacity is currently active, stood at 82.4% during the period.
Integration and Market Outlook
While the core business showed strength, the performance of the Encora unit remained flat sequentially. Investors are watching how the company manages this integration, as management expects the unit's performance to eventually align with the growth metrics of the core business by the third quarter. Following the results, brokerage firm Prabhudas Lilladher increased its price target for the stock to INR 2,300, based on an updated valuation multiple of 27x September 2028 estimated earnings. The firm noted that high growth visibility in top-tier accounts supports this outlook.
Sector and Investment Context
Like many IT services companies, Coforge faces the challenge of maintaining margins while integrating acquisitions and managing the cost of AI implementation. The IT sector is currently navigating shifting client spending patterns, where discretionary projects may face scrutiny, but demand for efficiency-driven technology remains consistent. The company's ability to maintain its margin targets while managing the flat growth in its acquired unit will be a key focus for shareholders. The next important updates for investors will be the progression of the Encora integration and whether the company can meet its 17% margin target by the fourth quarter as planned.