Coforge Soars 12% in 2 Days After Stellar Q2 FY25 Earnings Results: A Midcap IT Leader

Coforge’s share price jumped over 12% in 2 days following the release of its strong Q2FY25 results for the quarter ending September 2024.

The IT company reported a consolidated net profit of ₹233.6 crore, a rise of nearly 24.2% compared to ₹188 crore in the same quarter last year. Its consolidated revenue from operations also saw impressive growth, increasing by over 36.5% year-on-year to ₹3,118.6 crore, up from ₹2,285 crore in Q2FY24. 

Regarding constant currency, Coforge’s revenue grew by 26.3% quarter-on-quarter (QoQ) and 33% year-on-year (YoY). In USD terms, revenue rose 26.8% QoQ and 32.8% YoY, while in INR terms, it grew 27.5% QoQ and 34.5% YoY. The company’s EBITDA margin was 15.8%, reflecting a 53 basis point increase YoY. Coforge’s executable order book reached $1.3 billion, a robust 40% growth YoY, with an order intake of $516 million this quarter, including three large deals. This marked the eleventh straight quarter of order intake, surpassing $300 million. Additionally, the company added 13 new clients during this period.

In May, Coforge announced plans to acquire a 54% stake in Cigniti Technologies for ₹1,415 per share, valued at $220 million. This strategic move aims to help Coforge reach $2 billion in revenue. The Competition Commission of India approved the acquisition in June 2024, and it was completed in the second quarter.

Coforge’s CEO, Sudhir Singh, expressed confidence in the company’s growth, citing a strong pipeline of large deals and an order book that is now 40% larger YoY. He noted that the growth and margin improvements at Cigniti are signs of further growth ahead and emphasised that they have fully integrated the Cigniti team, exceeding synergy expectations.

Coforge also expanded its workforce, increasing its headcount by 5,871 employees to a total of 32,483. This includes 4,430 employees from the Cigniti acquisition, and 1,441 added organically during the quarter. The company reported an improvement in attrition rates, down to 11.7%, a decrease of 130 basis points YoY. On October 4, Coforge’s board approved a second interim dividend of ₹19 per share, with a record date of October 11.

Management expressed optimism about future quarters, boosting investor confidence. CEO Sudhir Singh highlighted strong performance indicators, including 27% sequential dollar growth, a 6.3% rise in organic business, significant EBITDA expansion, and a solid pipeline of large deals. He believes these factors position Coforge for sustained growth in the upcoming quarters.

On October 24, 2024, Coforge  Ltd’s share price opened at ₹7,535.00, touching the high of ₹7,759.00 as of 10:54 AM on the NSE.

In the last session, Coforge shares jumped 11.1% to close at ₹7,555.45 on the National Stock Exchange (NSE). The stock has increased about 22% this year, outperforming the Nifty index, which has grown 12%. Over the past 12 months, Coforge’s share price has risen by 54%, while the Nifty increased by 28%.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.