Debasis Mohapatra
Bengaluru, 25 October 2024
Mid-tier IT services firm, Coforge stock price has moved northwards after the company posted better than expected Q2 earnings.
The share price of Coforge has moved up 7.4% in the last five trading sessions to settle around Rs 7,677 in NSE. In the last one month, the stock has moved 11.16%. On the back of its consistent performance, the company’s share price has risen 47% in the last six months.
In the second quarter of FY25, the company reported organic revenue growth of 6.3% QoQ in USD terms. EBITDA margin for the quarter stood at 15.8%, up 53 basis points on a YoY basis.
Importantly, the order book of the mid-tier firm remained robust. Order intake stood at $516 million, making it the eleventh consecutive quarter of above $300 million order intake.
“Q2FY25 has been an exceptional quarter for the firm. A 27 percent sequential dollar growth with the organic business having grown 6.3 percent sequentially, a concurrent and very material expansion in EBITDA in H1, the second consecutive quarter of significant net headcount addition, a large deals pipeline that is looking very robust and an ever strengthening next twelve month signed order book which now is 40 percent higher YoY gives us confidence that the quarter and quarters to come shall see robust and sustained growth. The growth and the margin expansion at Cigniti are a preview of sustained growth and further increases in margin to follow. We have operationally fully integrated the Cigniti team, and the synergies have exceeded even our expectations,” Sudhir Singh, CEO of Coforge has said.
On the back of robust quarterly performance, many brokerage firms have raised the price targets for the company.
Brokerage firm, Morgan Stanley is Overweight on Coforge stock and has raised the target price of its shares to Rs 8,000. The company’s higher revenue growth visibility as against most peers, upside in Cigniti margins and healthy EBITDA to OCF conversion of 65-70% have been cited as the factors behind the optimism.
Similarly, other brokerage firms have also raised price target for the stocks. Against this backdrop, it has to be seen whether Coforge’s share price witness further upmove in a weak market.
