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What is the story about?
Shares of Coforge Ltd. fell as much as 5% on Tuesday, December 23, after the company announced in an exchange filing that it will hold a board meet on Friday, December 26, to consider a fund raising proposal.
In addition to the board meet, the company will also be holding an analyst meet on the same evening.
This is the second fund raise that Coforge has planned over the last 18 months. Previously, the company had raised ₹2,240 crore through the issue of shares to eligible institutional buyers through a QIP to fund the acquisition of Cigniti Technologies.
Back then, Coforge had issued shares to eligible institutions at a price of ₹4,600 apiece. Having undergone a stock split over the last 18 months, when one share of ₹10 each was split into five shares of ₹2 each, the effective price of the QIP comes down to ₹920.
The stock has nearly doubled from the split-adjusted QIP price from May 2024.
The question that beckons is, whether the company is looking to raise money for a potential acquisition?
If that is indeed the case, analysts indicate what could be the areas where Coforge will be looking at:
Coforge has negligible cash on its books and is committed to achieving its $2 billion revenue run-rate over the next few quarters. It had also assured in its last analyst meet that no further data center investments are in the offing.
However, the stock is under pressure due to risk of further dilution due to the fund raise, the company's cash conversion guidance is the weakest among its peers, and concerns over whether the 70% Free Cash Flow / PAT guidance will be under threat.
Shares of Coforge are trading 4.3% lower on Tuesday at ₹1,787.9. The stock is down 7% so far in 2025.
In addition to the board meet, the company will also be holding an analyst meet on the same evening.
This is the second fund raise that Coforge has planned over the last 18 months. Previously, the company had raised ₹2,240 crore through the issue of shares to eligible institutional buyers through a QIP to fund the acquisition of Cigniti Technologies.
Back then, Coforge had issued shares to eligible institutions at a price of ₹4,600 apiece. Having undergone a stock split over the last 18 months, when one share of ₹10 each was split into five shares of ₹2 each, the effective price of the QIP comes down to ₹920.
The stock has nearly doubled from the split-adjusted QIP price from May 2024.
The question that beckons is, whether the company is looking to raise money for a potential acquisition?
If that is indeed the case, analysts indicate what could be the areas where Coforge will be looking at:
- Capabilities: Engineering Services, Data Analytics Services, Service-now led revenue (consulting, implementation, support etc.)
- Geographies: Midwest and Westcoast in US, ANZ and APAC
- Industries: Healthcare and UK Public Sector verticals
Coforge has negligible cash on its books and is committed to achieving its $2 billion revenue run-rate over the next few quarters. It had also assured in its last analyst meet that no further data center investments are in the offing.
However, the stock is under pressure due to risk of further dilution due to the fund raise, the company's cash conversion guidance is the weakest among its peers, and concerns over whether the 70% Free Cash Flow / PAT guidance will be under threat.
Shares of Coforge are trading 4.3% lower on Tuesday at ₹1,787.9. The stock is down 7% so far in 2025.
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