Hold Coforge; target of Rs 2690: ICICI Direct

ICICI Direct's research report on Coforge

Coforge Ltd (Coforge) registered healthy revenue growth, up 8.1% QoQ in constant currency terms, above our estimate of 7.0% QoQ growth. The revenue growth was broad based across verticals mainly led by insurance (up 13.5% QoQ) and BFS (up 10.2% QoQ). Digital revenues (including IP) also increased 18.7% QoQ. Further, Coforge has guided for revenue growth of 6% YoY organic growth in FY21E and 17.8% EBITDA margin in FY21E before Esop cost.

Outlook

However, the recent run up in stock price factors in most positives. Hence, we downgrade the stock from BUY to HOLD with a revised target price of Rs 2690 (24x FY23E EPS).

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