Motilal Oswal Reiterates BUY on Coforge, Targets Rs 1800 (54% Upside)

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AuthorAnanya Iyer|Published at:
Motilal Oswal Reiterates BUY on Coforge, Targets Rs 1800 (54% Upside)
Overview

Motilal Oswal reiterated its BUY rating on Coforge, setting a target of Rs 1800 and projecting a 54% upside. The IT firm reported strong 4Q revenue growth of 2% QoQ in constant currency, beating estimates. Coforge also secured a strong 12-month executable order book worth $1.75 billion. EBIT margins improved to 16.6%, and adjusted PAT surged 119% year-on-year, highlighting its position as a structurally sound mid-tier player.

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Strong Fourth Quarter Results

Coforge posted strong fourth-quarter results, with revenue growing 2% in constant currency. This exceeded Motilal Oswal's estimate of 1.5% and highlights the company's operational strength and market positioning.

Significant Order Book Fuels Future Growth

While fourth-quarter order intake was $648 million, a 69.5% year-over-year decrease, Coforge secured a substantial 12-month executable order book valued at $1.75 billion. This strong pipeline offers significant visibility for future revenue.

Margins Climb, Profits Surge on Strong Execution

EBIT margins improved to 16.6%, beating the 15% estimate. Adjusted Profit After Tax (PAT) surged an impressive 119% year-on-year to INR 6.6 billion, surpassing the INR 4.8 billion estimate. The Free Cash Flow (FCF) to Net Income (NI) ratio was a healthy 76.3% for FY26.

Motilal Oswal Sees 54% Upside from Rs 1800 Target

Motilal Oswal views Coforge as a structurally strong mid-tier IT player, citing an improving margin profile, consistent deal wins, and steady demand for AI-led managed services. The brokerage values the company at 26 times its FY28E Earnings Per Share (EPS), setting a target price of INR 1,800. This valuation implies a potential 54% upside from current levels, supporting Motilal Oswal's BUY rating.

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