Coforge shares surge 7% on strong Q4 profit, dividend announcement

Shares of Coforge rose 6.7% to a high of ₹7,999 on the NSE in early trade on Tuesday, following strong fourth-quarter results and the announcement of an interim dividend.

At the time of writing, the stock was trading at ₹7,616, up 1.59% from the previous close of ₹7,496.5. It opened at ₹7,850, marking a 4.7% increase from the previous close. Despite today’s gains, the stock has declined 22% since January this year.

Coforge posted a consolidated net profit of ₹261 crore, up 16.5% year-on-year (YoY) from ₹224 crore in the same period last year. Sequentially, net profit increased by 21%. Revenue from operations also saw significant growth, rising 47% YoY to ₹3,410 crore from ₹2,318 crore, and 4.6% quarter-on-quarter (QoQ). The company announced an interim dividend of ₹19 per share.

A key highlight of the quarter was a record order intake of $2.1 billion, significantly higher than the $501 million in Q3 FY25 and the eight-quarter average of $451 million. This included five large deals across North America, the UK, and APAC regions. The strong order book has positioned Coforge well for robust growth in FY26.

Following the Q4 FY25 results, brokerages remained bullish on Coforge’s growth trajectory, underpinned by a robust order book, healthy deal flow, and strong execution, despite minor revisions in EPS forecasts.

JM Financial Institutional Securities Ltd. maintained its BUY rating on Coforge, while raising the target price to ₹10,000 from ₹9,610.

The brokerage noted that Coforge delivered 3.4% quarter-on-quarter growth in constant currency for its continuing business, in line with expectations. While the quarterly growth was steady, it followed a strong performance in the previous quarter, making the year-on-year growth of over 20% a better indicator of momentum.

Large deal wins, including the Sabre contract, point to the potential for further acceleration. Coforge reported a record total contract value (TCV) of USD 2.1 billion. Even excluding the Sabre deal worth $1.56 billion, the remaining deals added up to a healthy USD 566 million, with a strong book-to-bill ratio of 1.4 times.

The company’s executable order book for the next 12 months, compared to its last 12-month revenue, has improved from 0.91 times at the end of FY24 to 1.03 times, showing better revenue visibility. Management expects stronger organic growth in FY26, supported by the smooth ramp-up of the Sabre deal.

The brokerage expects that its estimate of 30% revenue growth in FY26 (including 25% organic growth, up from 15% in FY25) is achievable. Additionally, management expects profit margins to rise to 14% by the end of FY26, up from 13.2%, indicating that growth will not come at the cost of profitability.

“We, however, suspect it could come at a higher finance cost, as factoring/credit insurance of receivables of a B-/B3 rated Sabre could be higher. Our FY26-27E EPS is therefore little changed (-1% to +2%),” the brokerage report stated.

As a result, JM’s earnings per share forecast for FY26-27 has been adjusted slightly, ranging from a 1% decrease to a 2% increase. Still, the company expects earnings to grow at an average annual rate of 25% between FY25 and FY28, justifying a premium valuation.