Coforge Ltd (Coforge) reported healthy revenue growth, up 5.1% QoQ in constant currency (CC) terms, above our estimate of 3.0% QoQ growth. The revenue growth was led by insurance (up 3.9% QoQ), others (up 17.9% QoQ) and BFS (up 1.3% QoQ). The company declared a dividend of Rs. 13 per share. Coforge has guided for organic revenue growth of 17% in CC terms (highest in our coverage universe) in FY22E and EBITDA margin (excluding Esop and acquisition related costs) expansion of 1% to 19% in FY22E.
Valuation & Outlook
The company is witnessing a healthy deal pipeline and growing deal sizes, which will help improve revenue growth, going forward. In addition, ramp up in BFS & Insurance, revival in travel segment, traction in healthcare and strategic acquisition of SLK global will help drive long term revenues. This, coupled with improving margins, prompt us to have a positive view on the stock from a long term perspective. Hence, we upgrade the stock from HOLD to BUY with a revised target price of Rs. 3985 (30x PE on FY23E EPS) (earlier target price Rs. 3300).
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Coforge_Q4FY21.pdf
Shares of Coforge LTD. was last trading in BSE at Rs.3397.4 as compared to the previous close of Rs. 2892.45. The total number of shares traded during the day was 199125 in over 19225 trades.
The stock hit an intraday high of Rs. 3448 and intraday low of 2823.35. The net turnover during the day was Rs. 645363371.