Arihant Capital has given Accumulate recommendation for Coforge with a target price of Rs. 6068 in its research report issued on Oct 25, 2021
Arihant Capital’s research report on Coforge
Constant Currency Revenue growth +35.7% YoY/6.6% QoQ to (Mn USD) 212.8 against our estimate 210 (Mn USD). FY22 revenue growth outlook raised to at least 22% in CC terms against 19% earlier. Coforge has reported consolidated revenue of INR 15,694 Mn, +36% YoY/7.4% QoQ in Q2FY22 against our estimate of INR 16036 Mn. Consolidated EBITDA stood at INR 2747 Mn, up by 38.3% YoY/29.9% QoQ against our estimate of INR 2661 Mn. On the margins front, EBITDA margin expanded by 29 bps YoY/ 304bps QoQ to 17.5% against our estimate of 16.6% driven by higher offshore revenues and improved utilization. Consolidated PAT stood at INR 1467 Mn, up by 21.5% YoY/18.7% QoQ against our estimate of INR 1698 Mn. Order intake during the quarter was $285 million, on the back of three large deals secured during the quarter out of which two were greater than $ 50 Mn TCV each. New client addition remained strong 11 compared to similar addition in Q1FY22. Utilisation was up 150 bps QoQ to 78.5%, with attrition increasing by 270 bps QoQ to 15.3%. Interim dividend of 13 per share for FY22.
We value Coforge at P/E of 35x to its FY24E EPS INR 173.4, which yields a target price of INR 6,068 per share. We maintain an Accumulate rating on the stock.