Debasis Mohapatra
Bengaluru, 24 July 2024
Coforge has already acquired a 28% stake in Cigniti Technologies by the end of the June quarter (Q1 FY25) and will acquire the rest of the stake to take its total holding in the company in the range of 51-54% during the second quarter (Q2 FY25). The company expects the merger process to be over by April 1, 2025.
In the post-earnings analyst call, the mid-tier IT services firm informed that it has already taken the operational control of Cigniti Technologies.
“With regard to the acquisition of Cigniti Technologies, we have already secured a 28% stake and we shall secure 51% to 54% ownership of Cigniti during Quarter 2 itself,” Sudhir Singh, CEO of Coforge said during the analyst call.
“On the 5th of July, we have assumed Board and thereby operational control of Cigniti Technologies. Q2 results of Cigniti shall be delivered under the watch of the reconstituted team that is now running that business as we speak,” he added.
In May this year, Coforge announced its plan to acquire a 54% stake in Cigniti Technologies at Rs 1,415 per share. Cigniti Technologies- a listed entity in India- provides digital engineering services across the US, UK, Australia, Canada, Czech Republic, South Africa, and Singapore. Coforge has said that this acquisition would help it to grow its revenue to $2 billion by FY27 along with an improvement of margin by 150-200 basis points.
Cigniti, which announced its Q1 result this week, saw its USD revenue growing 2.4% in sequential term. Coforge’s management asserted that Cigniti would see its growth accelerating in coming quarters.
“We expect that the Cigniti business shall show even greater momentum going forward. And we believe that a reflection of that performance will be their likely performance in Quarter 2 itself where not only revenue, but also margin expansion is expected to be very significant,” Singh said. “With a cash of $15 million in the balance sheet, the Cigniti business is healthy and poised for significant growth in the quarters and years to come,” he added.
Coforge also informed that the Cigniti merger process would be over by April 1, 2025.
“We have been broadly as per plan towards the closure of Cigniti’s acquisition with 28% stake and the Board control of Cigniti on July 5, 2024. We now await SEBI’s approval for the open offer. We expect to close the open offer in Q2, post which we would initiate the merger process post approval from the Board of both the companies. and this would take about 9 to 12 months from the initiation of merger. The effective date of merger is being contemplated as April 1, 2025,” Chief Financial Officer of Coforge, Saurabh Goel said in the analysts call.
The share price of Coforge ended 2.24% higher at Rs 6,318 in NSE on Wednesday.
