Market Response & Growth
Coforge's shares experienced a 4% increase on Monday morning, a direct consequence of the IT exporter's outstanding performance during the September quarter.
The company showcased substantial growth both sequentially and year-over-year in terms of revenue and profit. This positive momentum was accompanied by improved profitability, as well as a consistent stream of new deal wins. Due to this robust performance, analysts have responded by increasing their 12-month price targets by an average of 7%. The company's ability to secure $514 million worth of new deals during the September quarter, following $507 million in the previous quarter, further solidified its position. This marked the fifth consecutive quarter where the total contract value (TCV) surpassed $500 million. The 12-month executable order book reached its highest point at $1,635 million, demonstrating greater revenue visibility for the company.
Financial Performance Details
Coforge's revenue for the second quarter reached $462.1 million, marking a 4.5% increase sequentially. This growth significantly outpaced the performance of its tier I peers, who saw growth below 3%. In rupee terms, revenue increased by 8.1%, reaching Rs3,985.7 crore. Net profit also saw a considerable rise, increasing by 18.4% to Rs375.8 crore compared to the previous quarter. The operating margin (EBIT margin) improved significantly, expanding by 260 basis points to reach 14%. The company's strategic move to partner with Sabre Corporation, a US-based travel technology company, in a 13-year, $1.6 billion deal that commenced contributing to revenue from the September quarter. Despite the broader industry trends, Coforge has maintained its hiring efforts, expanding its headcount to 34,896 in the September quarter, up from 31,991 a year earlier and 34,187 the previous quarter. The attrition rate remained low at 11.4%, slightly above the 11.3% of the previous quarter.
Analyst Perspectives & Projections
IDBI Capital noted that Coforge's distinctive AI-led solutions are fueling enterprise transformation and margin expansion. They have consequently raised their FY26 earnings per share estimate by 2.3% and the FY27 estimate by 5.2%, along with a 5% increase in the 12-month stock price target, setting it at Rs2,030. Elara Capital highlighted the strong outlook for the top verticals of banking, insurance, and travel, with clients continuing to invest. The firm has updated its earnings estimates by 4-7% for FY26 and FY27, increasing the 12-month target price to Rs2,010 from Rs1,850. The stock was trading at Rs1,830.3 at the end of the trading session on Monday.
Client Concentration Trends
The concentration of revenue from Coforge's top 10 clients has started to rise again, reaching 30.8% in the September quarter, up from 29.3% in the prior quarter, after hitting a low of 28.4% at the end of March 2025. This proportion has significantly decreased from over 40% seen seven years ago, reflecting a broader diversification of the company's client base.
