Coforge bulls raise estimates on attractive valuations after Q4 results

Shares of Coforge Ltd. will be in focus on Wednesday, May 6, after the company reported a mixed March quarter performance, with modest revenue growth but a sharp improvement in margins and cash flows.

Constant currency (CC) revenue growth came in at 2% sequentially, at the lower end of estimates. However, profitability stood out, with EBIT margin at 16.6%, marking the highest-ever quarterly level.

For Q4FY26, dollar revenue rose 1.7% to $489.1 million, while rupee revenue increased 6.3% to ₹4,450.4 crore.

EBITDA margin expanded to 20.6% from 18.3% a year ago. Net profit surged 145% YoY to ₹612.3 crore, aided partly by a low base.

Free cash flow jumped 68.4% YoY after remaining flat over the past five years, despite investments in Sabre. Coforge now expects FCF-to-PAT conversion to exceed 100% from FY27 onwards, compared to its earlier guidance of 70-80%.

Looking ahead, the company guided for robust revenue growth in FY27 and expects consolidated EBITDA margin to exceed 20.5%, up from 18.6% in FY26.

However, management indicated that revenue growth will be flattish in Q1FY27 due to the exit from a low-margin India portfolio worth $15-20 million, after which the growth trajectory is expected to improve.

Coforge's growth trajectory under watch

Nomura maintained a ‘buy’ rating with a target of ₹2,100, citing that while revenue was in line, margins and free cash flow beat estimates.

It said that a strong executable order book and AI-led efficiencies should support near- to medium-term growth, and raised FY27-28 EPS estimates by 2-5%.

Jefferies also reiterated a ‘buy’ with a target of ₹1,860, citing strong deal wins and a 16% YoY growth in executable order book, which provides visibility for double-digit organic growth.

The brokerage raised earnings estimates by 9-11% and expects a 23% EPS CAGR over FY27-29, calling valuations attractive at 19x one-year forward PE.

HSBC retained a ‘buy’ rating with a target of ₹1,710. It said that while revenue was slightly below expectations and growth may be impacted in the near term due to portfolio rationalisation, a strong order book could still support low-teens growth.

On the flip side, Citi maintained a ‘sell’ rating with a target of ₹1,115. It flagged moderating order book growth, rising headcount and concerns around the sustainability of margin gains.

The brokerage also pointed to near-term revenue softness due to the exit from certain India businesses.

Coforge shares ended 1.4% higher at ₹1,168 in the previous session, though the stock is still down 30% so far in 2026.

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