Motilal Oswal has retained its “Buy” rating on Coforge. The brokerage has set a target price of Rs 2,240. This implies a potential upside of 29% from current levels. As per the brokerage report, the company’s growth is fuelled by large-scale deal closures, a strong pipeline, and expected improvement in margins and cash flow conversion.
Lets take a look at the key reasons behind this call –
Motilal Oswal on Coforge: Strong deal pipeline
Motilal Oswal noted in its report that Coforge continues to show strength in signing large deals, with management targeting “at least 20 deals above USD 20 million in FY26”.
So far, five such deals have already been closed. CEO Sudhir Singh highlighted, “The company enjoys a win rate of ~40-45% in proactive proposals, notably higher than RFP-led deals.”
Motilal Oswal on Coforge: Improving margins and cash flow potential
Margins and cash flows are another focus area for investors. The brokerage report stated that the company has guided for EBIT margins of approximately 14% in FY26, which management believes is sustainable.
While past quarters were impacted by one-off items, the brokerage report highighted that Coforge now expects “a normalized margin run-rate from here.” Utilization is also expected to improve further, with subcontracting as a lever for flexibility trending lower.
Motilal Oswal on Coforge: Cross-selling and inorganic growth
Coforge is also leveraging opportunities from its acquisition of Cigniti, with cross-selling progressing steadily.
According to the report, “Cross-selling opportunities in Cigniti remain highly synergistic for the company.” Beyond that, the management remains open to acquisitions in areas that enhance capabilities and diversify offerings.
The brokerage house also pointed in its report that the company’s investments in capacity and acquisitions have temporarily affected free cash flow growth compared to peers.
Furthermore, it added, “Coforge, admittedly, lags peers,” but also points out that IT services remain a gold standard for cash flow conversion.