Coforge saw its target price increased to Rs 2,100 by Emkay Global, driven by a strong $2.38 billion order book. While the company missed revenue estimates in the second quarter due to integration challenges, management raised its margin guidance for fiscal year 2027. Investors are now watching if the company can sustain this profitability target and successfully execute its record deal intake.
Coforge has seen its target price revised to Rs 2,100 by brokerage Emkay Global, following a mixed performance in the second quarter. While the IT services provider reported a sequential revenue growth of 10.1% to $652.2 million, this figure did not meet broader market expectations. However, the brokerage pointed to strong deal wins as a key reason for the positive outlook.
The company secured eight large deals during the quarter, with total order intake crossing the $1 billion mark. This has strengthened the company's 12-month executable order book to $2.38 billion, representing a 45% increase compared to the previous year. Management has expressed confidence that this level of deal activity will continue into the next quarter.
Investors are also focused on the company's profitability. Although the second-quarter operating profit margin stood at 16%, management has raised its guidance for fiscal year 2027 to 16%, up from the earlier estimate of 15.5%. The path to reaching a 17% exit margin by the fourth quarter hinges on improved gross margins and the completion of expenses related to the integration of the Encora acquisition.
A key driver for the improved earnings outlook is the anticipated reduction in currency hedge-related losses and the end of one-time acquisition costs starting in the third quarter. Additionally, the company has added another client contributing over $100 million in annual revenue, which helps diversify its revenue base.
Despite these positives, the recent revenue miss highlights the ongoing challenges of integrating large acquisitions like Encora. The company’s financial health depends on its ability to convert its robust order book into actual revenue while managing the cost of integration. Investors will likely track the company's ability to maintain its margin expansion trajectory and execute these large deals in the coming quarters.