Coforge share price rallies over 12% to record high on strong Q2 results

Coforge share price surged over 12 per cent in intra-day trading on Wednesday, October 23, following the announcement of strong results for the quarter ended September 2024 (Q2FY25).

The IT company’s consolidated net profit increased nearly 24.2 per cent year-on-year (YoY) to ₹233.6 crore in the July-September quarter. The profit stood at 188 crore in the same period last year. Its consolidated revenue from operations also showed significant growth, rising over 36.5 per cent YoY to ₹3,118.6 crore from ₹2,285 crore in Q2FY24.

In constant currency terms, Coforge’s revenue increased by 26.3 per cent quarter-on-quarter (QoQ) and 33 per cent YoY. In USD terms, the company’s growth was 26.8 per cent QoQ and 32.8 per cent YoY, while in INR terms, revenue grew 27.5 per cent QoQ and 34.5 per cent YoY. Coforge also reported an EBITDA margin of 15.8 per cent for the quarter, reflecting a 53 basis points increase YoY.

The company’s order book, which is executable over the next 12 months, reached $1.3 billion, marking a robust 40 per cent YoY growth. Coforge’s order intake for the quarter stood at $516 million, including three large deals, marking the eleventh consecutive quarter where order intake surpassed $300 million. Additionally, the company added 13 new clients during this period, further solidifying its market presence.

Earlier in May, Coforge proposed the acquisition of a 54 per cent stake in Cigniti Technologies at ₹1,415 per share, in a deal valued at $220 million. This strategic acquisition, aimed at helping Coforge become a $2-billion revenue enterprise, received approval from the Competition Commission of India in June 2024 and was completed during the second quarter.

Commenting on the results, Coforge’s CEO Sudhir Singh said, “A large deals pipeline that is looking very robust and an even strengthening order executable, which is now 40 per cent higher YoY, gives us confidence that the quarter and quarters to come shall see robust and sustained growth. The growth and margin expansion at Cigniti are a preview of sustained growth and further increases in the margin to follow. We have operationally fully integrated the Cigniti team, and the synergies have exceeded even our expectations.”

Coforge’s workforce also saw significant growth, with headcount increasing by 5,871 employees to a total of 32,483. This includes 4,430 employees from the recently acquired Cigniti, while the company added 1,441 employees organically during the quarter. Attrition improved to 11.7 per cent, down by 130 basis points YoY.

In a shareholder-friendly move, Coforge’s board had approved a second interim dividend of ₹19 per share on October 4, with October 11 as the record date. This dividend reflects the company’s commitment to returning value to its investors while continuing its growth trajectory.

The management of Coforge expressed optimism for the upcoming quarters, boosting investor confidence. In the exchange filing, CEO Sudhir Singh highlighted the company’s strong performance, citing a 27 per cent sequential dollar growth, a 6.3 per cent rise in organic business, significant EBITDA expansion, and a solid pipeline of large deals. Singh emphasised that these factors position Coforge for strong and sustained growth in the quarters ahead.

Stock Price Trend

The stock rallied 12.3 per cent in intra-day deals to its record high of ₹7632.75. It has now surged 78 per cent from its 52-week low of ₹4,291.05, recorded in May 2024.

The IT stock has gained over 38 per cent in the last one year and around 22 per cent on a year-to-date basis. The scrip has risen 6.7 per cent in October so far.