Whalesbook
Choice Equities Sticks with Buy Rating
Choice Institutional Equities has reiterated its BUY recommendation for Coforge, setting a target price of ₹1,900. The firm's analysis of Coforge's Q4FY26 performance shows confidence in its growth and margin expansion potential. This is supported by significant deal momentum, effective client engagement, and a strong order book.
Margin Gains Driven by Cost Control and AI
The company's margins expanded to 16.6%, reflecting effective cost management and early gains from AI efficiencies. Coforge's strategic decision to exit lower-margin business segments may lead to slower growth in Q1FY27. However, this move signals a shift towards higher-quality, more profitable growth opportunities, seen as vital for long-term value.
AI and Large Deals Fuel Future Growth
Continued success in securing large deals, realizing synergies from the Encora acquisition, and scaling AI capabilities are providing strong visibility for fiscal year 2027 estimates. Coforge's evolution into a high-quality, margin-focused growth company is supported by improving profits and enhanced cash flow. The firm expects Coforge to outperform industry rivals.
Analysts Project Robust Financial Growth
Choice Institutional Equities forecasts revenue, earnings before interest and taxes (EBIT), and profit after tax (PAT) to grow annually at rates of 21.2%, 25.7%, and 29.9%, respectively, from FY26 to FY29. The BUY rating is reaffirmed with a ₹1,900 target price, based on an estimated FY28 earnings per share (EPS) of INR 67.8.