The entire IT pack is under pressure today and Coforge share price is down 3%. In fact the stock is down 12% over 1 month and slumped 25% so far in 2025. Despite that Jefferies has reiterated its Buy recommendation on the stock with a price target of Rs 10,100. It implies 32% upside from current levels.
The three reasons are-
Jefferies remains bullish on Coforge’s long-term growth potential.
Global brokerage firm Jefferies remains optimistic about Coforge, reiterating its ‘BUY’ rating with a price target of Rs 10,100. The brokerage believes that the recent 22% correction in the stock has made its valuation attractive, trading at approximately 33 times its estimated FY26 earnings.
“Coforge remains our high-conviction pick within Indian IT,” added the brokerage in its report.
Jefferies on Coforge: Consistent revenue growth even in challenging time
According to the brokerage report, the IT players has reported a strong revenue growth, outperforming its peers in both strong and weak demand cycles.
Between FY20 and FY23, the company achieved a 17% CAGR in revenue, the highest among its competitors. Even during the current slowdown, Coforge has sustained a 14% CAGR, compared to an industry average of just 2%.
Furthermore, the brokerage in its report noted, “Given that our current FY26 revenue forecast of $1.77 billion is at the lower end of the expected range, the downside risks appear limited.”
Jefferies on Coforge: Margin expansion and debt reduction to drive profit growth
Coforge’s profitability is set to improve as wage pressures ease and foreign exchange trends turn favourable.
The brokerage firm expects a 100 basis point expansion in gross margins over FY25-27, supported by stable selling, general, and administrative (SG&A) expenses. Additionally, a reduction in ESOP costs (80 bps) and depreciation (50 bps) should help the company achieve a 15% EBIT margin by FY27.
“Over FY25-27E, we expect Coforge to repay the majority of its debt through internal accruals, which along with lower minority interests post takeover of 100% stake in Ciginiti in FY26 should boost recurring PAT growth at ~44% CAGR,” added the brokerage in its report.
Coforge stock split announcement
For the first time, Coforge is set to undertake a stock split. The company’s board will meet on March 4, 2025, to discuss the sub-division of its equity shares.
In the BSE filing, the company said, “the meeting of Board of Directors of the Company is scheduled to be held on Tuesday, March 04, 2025, inter-alia to consider the proposal of alteration in the share capital of the Company by sub-division/ split of the existing Equity Shares of the face value Rs. 10/- each, fully paid-up, in such a manner as may be determined by the Board of Directors subject to approval of the shareholders of the Company and any approvals, as may be required under applicable law.”