Coforge Ltd - Q1FY22 First Cut - ICICI Direct

(CMP : Rs. 4,638, Mcap : Rs. 28,108 crore)

Coforge Limited reported healthy set of Q1FY22 numbers on revenue front. The company's revenue grew 16.0% QoQ (above our estimate of 10.1%) of which 7.6% QoQ was organic growth and rest led by acquisition of SLK global. The growth in revenues was led by BFS (up 43.1% QoQ due to organic & inorganic growth), Insurance (15.8% QoQ) and Transport (up 15.8% QoQ). Geographically, growth was led by Americas (up 30.9% QoQ) and RoW (up 7.6% QoQ). However, EBITDA margin declined 243 bps QoQ to 14.4% (below our estimate of 16.4%). The company declared a dividend of Rs. 13 per share.

The company has revised its organic revenue growth guidance upwards from 17% YoY in CC terms to 19% YoY in FY22E. The company has added 8100 employees in the quarter of which 1138 employees added were on organic basis and rest were inorganic.

Q1FY22 Earnings Summary

- US$ revenues grew 16.0% QoQ to $199.7 million (vs our expectation of 10.1% QoQ growth and $189.7 million)

- Rupee revenues grew 15.9% QoQ to Rs. 1,461.6 crore (vs. our estimate of Rs. 1,400 crore)

- The executable order book over next 12 months on organic basis grew 7.7% QoQ to US$560 million. Overall order book increased 24% QoQ to US$645 million

- EBITDA margin declined 243 bps QoQ to 14.4% (below our estimate of 16.4%) mainly led by full impact of annual wage hikes rolled out across the organization worldwide with effect from April 1, higher visa costs and impact of transition in some of the material deals signed over the last six months

- PAT came in above our estimate at Rs. 123.6 crore (our estimate of Rs. 114.7 crore) mainly due to lower tax rate

The company has reported robust Q1FY22 numbers on organic basis sequentially despite a higher base last quarter. The company has also revised its guidance upwards from 17% YoY to 19% YoY in FY22E. Hence we are positive on the stock. We would be revisiting our estimates and coming out with a detailed report shortly.

Shares of Coforge LTD. was last trading in BSE at Rs. 4751.45 as compared to the previous close of Rs. 4723.05. The total number of shares traded during the day was 37844 in over 6961 trades.

The stock hit an intraday high of Rs. 4827.3 and intraday low of 4567.25. The net turnover during the day was Rs. 177459007.

Source : Equity Bulls

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