Sharekhan's research report on Coforge
Coforge’s reported revenues at $251.7 million, up 3.7% q-o-q in cc, in-line with street estimates but missed our estimates by ~70bps. Adjusted EBITDA margin in Q3FY23 improved 10 bps to 18.5%. The margins for the quarter saw an impact of forex loss of 70 bps, which almost nullified tailwinds from INR depreciation for the quarter. The company had a robust order intake of $345 million, fourth consecutive quarter of order intake of over $300 million. The company signed five large deals signed during the quarter (including one over $50 million TCV deal). The Management has upped its FY23 annual revenue growth guidance to 22% in cc and reaffirmed its adjusted EBITDA annual margin guidance at 18.5-19%. The management stated that across the verticals of Banking and Financial Services (BFS) and Insurance client spending are largely still strong. The company is seeing a rebound in its travel, transportation, and hospitality vertical, which has picked up pace post-pandemic.
Outlook
We expect the outlook for FY24 to be uncertain on account of global headwinds and any recovery is most likely to be gradual. Coforge on the back of consistent deal wins and healthy order backlog provides decent revenue visibility (FY23 guidance raised in Q3FY23).Hence we maintain Buy rating on Coforge with revised PT of 4900. ( to reflect the rollover of target multiple to FY25E EPS).At the CMP, the stock trades at 25.8x/21.9x its FY24E/FY25E EPS respectively.
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