Coforge shares rise 2% as robust Q3 earnings keep brokerages upbeat

Shares of Coforge Limited traded over 2 percent higher at Rs 6,415 in the morning trade on January 23 after the company reported over 31 percent growth in consolidated net profit for the October-December period at Rs 238 crore.

The company’s revenue from operations gained nearly 2 percent sequentially to Rs 2,323 crore, up from Rs 2,276 crore in the September quarter. In dollar terms, revenue came at $282 million as against $278.1 million in the previous quarter.

At 9:46am, the stock was trading at Rs 6,367, up 1.3 percent from the previous close on the NSE. The counter has gained over 46 percent in the last year, outpacing the Nifty.

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The results prompted bullish calls on the Coforge stock. Global brokerage firm Morgan Stanley has an ‘overweight’ rating on the company with a target price of Rs 7,200 per share. This implies an upside potential of 14.5 percent from the previous close of Rs 6,283.

Analysts have said that the revenue growth guidance was maintained during the quarter, implying a healthy Q4 driven by order wins.
“While valuations are at a premium, they can sustain drive by robust revenue growth”, Morgan Stanley added.

Jefferies has a ‘buy’ tag on the stock and with a target price of Rs 7,400. This has an upside of nearly 18 percent from the previous close. The firm suggests that the order book should support mid-teens growth. “Sharp fall in average employee costs should margin expansion. We expect a 28 percent EPS CAGR Over FY24-26”, it said.

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