Jefferies not only downgraded the stock to underperform but also cut its price target by 44% from Rs 7,650 to Rs 4,290. The global brokerage also warned of a rating downgrade, saying the acquisition of Signity Technologies would further increase execution risk.
Citi also placed a sell call on Coforge and lowered its price target to Rs 4,550, while Incred also downgraded the stock and lowered its price target to Rs 4,431.
When reporting fourth-quarter results, the company's management refrained from providing quantitative earnings guidance, unlike in past years, citing market uncertainty.
“We reduced FY25E/26E EPS by 15.3%/11.8%, factoring in the fourth quarter failure, revenue slowdown and margin weakness. Given the soft trajectory of earnings margins, potential equity is expected to increase from a target P/E ratio of (30x to )28 times. Even though the stock price has adjusted by 10%/22% in the past 1M/3M, the decline in earnings is still quite severe, so we believe that the valuation is well maintained. and reduce TP to Rs 5,200 at 28x March'26 EPS,'' Emkay Global said. In the March quarter, Coforge reported that CC by BFS vertical increased by 1.9% quarter-on-quarter (QoQ). The company's TCV was strong at $774 million (up 118.6% from the previous quarter and 157% from the previous year). Company management expects strong growth in fiscal 2025 based on strong 12-month fillable order backlog of $1.019 billion (up 4.6% sequentially and 17.3% year over year). ), no clear quantitative growth guidance was provided. “EBITDA margin expanded 70 basis points sequentially to 18% in the fourth quarter due to improved utilization and increased offshore revenue. We expect Coforge to continue to organically outperform its peers. Signity, on the other hand, fills the white space management was talking about and is also an EPS.''For growth, we wanted a company with capabilities in the new-age technology space. We have not yet incorporated the Signity acquisition into our estimates as we await key milestones in the merger process, but we are preparing pro forma financial reports (details internal) for it. It is a combined entity,” Nubama said.
The brokerage maintains a buy call but the target price has been lowered to Rs 5,850.
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