Jefferies has maintained a ‘buy’ rating for Coforge, with a revised target price of Rs 6,580 from the earlier Rs 5,250, indicating an impressive upside of 14%.
In the recent report, Jefferies highlighted challenging macroeconomic conditions and furloughs lasting longer than usual in the third quarter due to shorter notices. Coforge’s management anticipates growth to be at the lower end of their 13-16% guidance.
However, recent deal wins in the banking, financial services, and insurance sector suggest a potentially brighter outlook for the fourth quarter. Jefferies also adds that the company’s strategic focus on the banking and financial services sector has proven successful, although traction in the travel sector remains limited. Despite these challenges, Coforge’s management envisions similar growth in FY25, buoyed by recent deal successes.
The report also states that the company is actively pursuing cost optimization measures to enhance margins by 150–300 basis points over the next three to four years. The company’s commitment to a well-diversified revenue stream, spanning the public sector, healthcare, hi-tech, and retail, is key to achieving its goal of becoming a $2-billion enterprise.
Barings, having recently divested its stake in Coforge, was revealed to have had limited influence on the company’s operations. Coforge’s unwavering focus remains on delivering sector-leading growth, even amidst recent promoter exits.