Reduce Coforge, target price Rs 2220: ICICI Securities

ICICI Securities has given a reduce rating to Coforge with a target price of Rs 2220. The share price moved down by 5.32 per cent from its previous close of Rs 2381.25. The stock’s last traded price is Rs 2254.55.

Coforge Ltd., incorporated in the year 1992, is a Mid Cap company (having a market cap of Rs 13761.86 Crore) operating in IT Software sector.

Financials
For the quarter ended 30-09-2020, the company reported a Consolidated sales of Rs 1153.70 Crore, up 9.15 % from last quarter Sales of Rs 1057.00 Crore and up 11.09 % from last year same quarter Sales of Rs 1038.50 Crore Company has reported net profit after tax of Rs 122.20 Crore in latest quarter.

Investment Rationale
The company expects stable EBITDA margin (pre RSU) in FY21 (vs FY20). While the brokerage likes the company for its differentiated competitive positioning in certain niche areas (e.g. insurance, TTH), expensive valuation (26.9x FY22E EPS) is the key rationale behind the REDUCE rating.

Promoter/FII Holdings
Promoters held 70.3 per cent stake in the company as of Sept 30, 2020, while FIIs held 13.9 per cent, DIIs 6.8 and public and others 9 per cent.