Coforge’s chairman resignation has brought governance concerns into focus, but the latest brokerage views suggest the development has not altered the company’s larger growth story. CLSA and Nuvama Wealth Management remain positive on Coforge, with their arguments centred on different strengths ranging from governance and management execution to Encora synergies, deal momentum, margins and cash generation.
The trigger was chairman O.P. Bhatt’s resignation after an internal audit raised concerns over the manner in which the Board Evaluation Report was presented and disclosed. Coforge clarified that the matter was unrelated to its financial statements and financial reporting. CLSA called the development “not a red flag”, while Nuvama said “concerns overdone” and maintained that the growth story remained intact.
| Coforge: brokerage view | CLSA | Nuvama |
| Rating | High Conviction Outperform | Buy |
| Target price | Rs 2,170 | Rs 2,350 |
| Potential upside | 11% | ~27% |
| Main trigger | Encora synergies | Growth + margins + cash flows |
| Key concern | AI, execution, deal structure | Governance concerns seen as overdone |
Coforge: Chairman exit does not change the business outlook
The immediate concern is whether Bhatt’s resignation points to a broader governance problem. The brokerages largely separate the board-level issue from the company’s operations.
Nuvama said the audit-related matter concerned disclosures and processes around the Board Evaluation Report and not the company’s financial statements. The brokerage said it saw “no impact of this even on the business or financials of the company.”
CLSA took a similar view, pointing to Coforge’s internal audit, its long execution record under CEO Sudhir Singh and scrutiny of the company under both current and previous private-equity ownership. It also noted KPMG’s role as internal auditor.
The brokerage’s broader assessment was that Coforge’s governance standards have shown “consistent improvements” since FY20.
CLSA on Coforge: ‘High Conviction Outperform’
CLSA has retained its ‘High Conviction Outperform’ rating with a Rs 2,170 target price, implying 11% potential.
Its confidence is based on more than the latest board development. CLSA sees the company’s long execution record and governance structure as important positives, while its main growth argument comes from Encora.
CLSA said Coforge is “one of our top picks”, with strong growth expected from revenue synergies from the acquisition.
The brokerage expects earnings to continue growing through FY29, with EPS growth forecast at 11.3% in FY27, 14.3% in FY28 and 16.1% in FY29.
CLSA’s valuation also reflects some caution. It uses a blended price-to-earnings and discounted cash flow approach, partly because of the longer-term negative narrative around artificial intelligence for global system integrators.
Nuvama on Coforge: ‘Buy’
Nuvama has retained its ‘Buy’ rating and Rs 2,350 target price, implying about 27% upside based on the price disclosed in its report.
The brokerage’s case is built around the company’s ability to sustain industry-leading growth while keeping a close watch on margins and cash generation.
Nuvama said it continues to like Coforge’s “industry-leading growth”, supported by its portfolio, management approach and M&A track record.
It also sees management’s focus on margins and cash flows as an important part of the earnings story. Rather than treating growth and profitability as separate issues, Nuvama expects stronger execution to support both.
The valuation provides another reason for its confidence. Nuvama said Coforge’s FY28 PE was 25x, compared with 31x for Persistent Systems, leaving room for a rerating if the earnings trajectory plays out as expected.
Encora is the common growth thread
Encora appears in all three bullish arguments, although the brokerages place different weight on it.
CLSA sees revenue synergies from Encora as a major driver of future growth. Nuvama, meanwhile, includes Coforge’s M&A track record among the reasons it remains positive on the company.
The acquisition therefore sits at the centre of the longer-term thesis. The opportunity is not merely to add Encora’s existing revenue, but to generate additional business from the combined client base.
Governance is the main near-term question, growth is the bigger debate
CLSA spends more time examining the governance question than the other two brokerages. Its assessment is that Coforge’s governance framework has improved over time.
Independent directors accounted for 67% of the board in FY26, compared with 38% in FY23. Independence in the Audit Committee and Nomination and Remuneration Committee had also increased.
The shareholder vote against Bhatt’s reappointment provides further context. The resolution received 65% votes in favour, below the 75% required for approval. CLSA noted that Advent, classified under the ‘Public-Others’ category, voted against the reappointment.
Nuvama’s interpretation is that the chairman’s exit should not be confused with a deterioration in the operating business.
The risks are still real
The bullish calls do not remove the risks around Coforge.
CLSA points to the company’s dependence on CEO Sudhir Singh, potential issues around the Sabre deal beyond 2029, currency movements and weaker discretionary demand in Banking, Financial Services and Insurance and Travel, Transport and Hospitality.
It also sees risks from one-off expenses, more aggressive deal structures that could increase capital expenditure and working capital, weaker return ratios and the recent H-1B visa fee increase.
Its expectation of 15.5% minimum EBIT margin guidance and 100%+ free cash flow conversion shows what it wants to see from Coforge as the growth cycle progresses.
So, is Coforge still a buy?
The latest brokerage views point to a yes, but with different degrees of conviction.
CLSA has the strongest rating language with ‘High Conviction Outperform’, backed by its view on governance improvements and Encora-led growth. Nuvama remains a ‘Buy’ and sees the chairman issue as overdone, while its confidence rests on management execution, M&A and cash generation.
The important takeaway is that none of the three brokerages has made the chairman resignation the centre of its Coforge thesis. The focus remains on whether the company can sustain growth, integrate Encora effectively, protect margins and convert earnings into cash.
With target prices ranging from Rs 2,040 to Rs 2,350, the brokerages continue to see upside, although the size of that opportunity varies significantly across their models.
Disclaimer: This article is based on the views, estimates, ratings and target prices published by CLSA, Nuvama in their respective Coforge research reports. The information is provided solely for informational and educational purposes and should not be considered investment advice, a recommendation to buy, sell or hold any security, or a substitute for independent financial research. Brokerage estimates, earnings forecasts, target prices and ratings are subject to change and may differ from actual business or market outcomes. Stock market investments are subject to market risks, including the possible loss of principal. Past performance does not guarantee future returns, and projected earnings or returns may not materialise due to changes in economic conditions, company performance, interest rates, regulations, currency movements, demand, competition, execution and other factors. Readers should independently assess the information, consider their own financial circumstances, investment objectives and risk tolerance, and consult a qualified financial adviser before making any investment decision. Neither the author nor the publication assumes responsibility for any financial loss arising from reliance on the information presented in this article.