Coforge Share Price Drops 10pc Following Q4 Results; ‘BUY, SELL or HOLD’ Check Dividend Amount And Share Price Target (image source: Today Technology Market ResearchDigital)
Coforge Share Price Target: Coforge stocks on Friday were down by 10 per cent or Rs 490 per share at Rs 5,480 per share on NSE around 12:20 pm. While the stock has experienced the same dip on the BSE 30 share index. The reasons for the sharp fall in shares could be the disappointing Q4 results with the drop in net profit. As the stock is trading at its low should investors ‘BUY, SELL or HOLD’? Here is what the brokerage recommended.
Coforge Share Price Target 2024
JM Financial On Coforge Share Price Target
Stock Brokerage JM Financial has given a ‘BUY’ rating for the IT stock projecting the 20 share price correction. The brokerage has set the Coferge price target at Rs 5,570 per share.
“Coforge reported an in-line 1.9 per cent cc QoQ growth (JMFe: 1.8 per cent). Margins missed while deal wins (USD 750mn; 2.7x book-to-bill) picked up. Coforge’s execution-focus helps it win deals consistently (TTM TCV: USD 1.9bn; 1.8x BTB) while protecting the current book of business. 17 per cent YoY growth in 12-M executable order book (EOB), higher than revenue growth (13 per cent) reflect the trend while undergirding a healthy revenue visibility. Surprisingly however, management refrained from providing a quantitative guidance for FY25, citing elevated uncertainty. A 1.3x year-beginning EOB to NTM revenue conversion (lowest in past 5 years) in FY24 was at the lower bound of historical range, indicating higher leakage. 1.2x conversion, assuming leakages deteriorate further, would imply c.10 per cent FY25E USD revenue growth. That forms the basis of our FY25 estimates. Coforge also announced acquisition of Cigniti Tech (CIGN IN; NR), an assurance (testing) company. Management believes Cigniti complements Coforge’s verticals, geo footprint and client relationships. Coforge has done comprehensive audit (financial and forensic) of the target and finds comfort in scaled relationships and in-place contracts (MSAs over SOWs). We estimate that at current price, the acquisition will be EPS accretive (Exhibit 1). Synergies are difficult on realise, especially in large acquisitions. But we are willing to give benefit of doubt to Coforge’s clinical execution track-record. We have not merged the financials yet pending merger process. But we cut Coforge’s FY25/26E EPS by 24/25 per cent on lower growth/margin assumptions. c.20 per cent correction YTD seems to price this in already. Maintain BUY with a revised TP of INR 5,570 (from INR 6,940), said JM Financial.
Coforge Q4 Results
IT firm Coforge recently released its financial results for the fourth quarter of the fiscal year 2023-24, unveiling a mixed performance. While net profit witnessed a decline, revenue experienced a modest increase. Additionally, the company announced an interim dividend and outlined plans for the acquisition of Cigniti Technologies Limited.
In the March 2024 quarter, Coforge recorded a 5.6 per cent decline in net profit, with figures dropping to Rs 229.2 crore compared to Rs 242.8 crore in the previous quarter. However, revenue exhibited a positive trajectory, rising by 1.5 per cent to reach Rs 2,358.5 crore in Q4, up from Rs 2,323.3 crore in the preceding quarter.
Coforge Dividend Announcement
The board of Coforge declared an interim dividend of Rs 19 per share, with the record date set for May 15, 2024. This move reflects the company’s commitment to providing returns to its shareholders amidst challenging market conditions.
Earnings per share (EPS) witnessed a decline to Rs 36.21 in Q4 from Rs 38.63 in the previous quarter of FY24. Moreover, earnings before interest and tax (EBIT) fell by 4.1 per cent to Rs 301.1 crore in the last quarter, with EBIT margins slipping to 12.8 per cent from 13.5 per cent on a quarter-on-quarter basis.
On an annual basis, Coforge reported a significant increase in revenue from operations, with figures rising by 14.52 per cent to Rs 9,179 crore in FY24 compared to Rs 8,014.6 crore in FY23. Net profit also witnessed growth, climbing by 12.14 per cent to Rs 835.6 crore in the last fiscal year.
In addition to its financial results, Coforge announced its approval for the acquisition of Cigniti Technologies Limited. This strategic move underscores the company’s commitment to expansion and diversification in the rapidly evolving IT landscape.
Coforge Growth Outlook
Sudhir Singh, Chief Executive Officer of Coforge, highlighted the company’s impressive performance in FY24, citing a 13.3 per cent growth in constant currency (CC) organic terms. Singh expressed confidence in achieving robust growth in FY25, fueled by a significant increase in order intake and margin improvement.
Coforge elaborated on its acquisition of a 54 per cent stake in Cigniti Technologies, emphasizing its potential to drive the company’s growth to USD 2 billion by FY27. The acquisition is expected to enhance operating margins by 150-200 basis points by FY27, underscoring Coforge’s strategic vision for future expansion.
