The Coforge share price is in focus today as the company signed an acquisition deal to foray into AI and data services. The company has acquired Encore, which is its biggest bet, as per the brokerages. Brokerages have given a thumbs-up to the deal. Leading brokerage house, Nuvama, pointed out that the “Encora acquisition shall further drive and diversify Coforge’s growth, which has been industry leading, organically itself. The share-swap agreement also reflects the confidence that the PE firms have in Coforge’s business model.”
Nuvama on Coforge
Nuvama Institutional Equities has maintained its ‘Buy’ rating on Coforge after the company acquired Encore. The brokerage has a target price of Rs 2,250, an upside of 34.4% from the current market price. According to them, “Encora is Coforge’s biggest and boldest bet yet. We like the acquisition and transaction structure and see Encora further accelerating Coforge’s growth.”
The acquisition would create an AI-native engineering, cloud and data services powerhouse, and expand geographic presence. The transaction is likely to close in four–six months, subject to approvals. With $600 million in revenue (30% of Coforge), Encora is Coforge’s biggest and boldest bet yet.
“We like the acquisition and transaction structure and see Encora further accelerating Coforge’s growth. We are not incorporating Encora’s financials yet into estimates,” said Nuvama in a research note.
Coforge acquires Encore
Coforge has announced the acquisition of Encora—a product design and engineering firm—for a value of $2.35 billion. Nuvama called the “transaction smartly structured” with share-swap. The deal includes a share swap for $1.89 billion (93.7 million shares of Coforge to be issued) along with a QIP/bridge loan to retire its $550 million term loan. However, management highlighted that the QIP option shall be evaluated nearer to the closing of the transaction (six months) with the possibility that it might not even be required.
“Coforge has signed a definitive agreement to acquire 100 per cent shares of Encora from Advent International, Warburg Pincus and other minority shareholders. The enterprise value of the transaction is $2.35 billion,” the company said.
Coforge share price
The share price of Coforge has fallen 9.4% in the past five trading sessions. The stock has declined 12% in the last one month and 13% over the previous six months. Coforge’s share price has erased almost 15% of investors’ wealth in the past one year.
