Coforge Shares Rise Over 2%, Kotak Neo Research Raises Fair Value to ₹2,000 Following Strong Q1 FY27 Results

Coforge shares traded higher on Wednesday after the IT services company reported a stronger-than-expected performance for the June quarter, prompting Kotak Neo Research to raise its fair value on the stock to ₹2,000 while reiterating its Buy rating.

The stock was up 2.21% at ₹1,723.30 as of 1:25 pm IST, gaining ₹37.30 over its previous close.

Kotak Neo Research said Coforge delivered a robust June quarter, supported by better-than-expected revenue growth, margin expansion and healthy deal wins. The research note also highlighted encouraging progress in the integration of Encora, a broad-based growth outlook across business segments and management's continued focus on technology modernisation and artificial intelligence-led opportunities.

Excluding planned business exits, organic constant-currency revenue grew 5.2% sequentially during the quarter, while EBIT margin exceeded the firms estimate by 50 basis points. On a reported basis, organic constant-currency revenue increased 1.1% quarter-on-quarter, outperforming the research team's estimate by 120 basis points.

Adjusted profit after tax rose 18.4% from the previous quarter and 86.5% compared with the same period last year, coming in 4.8% ahead of estimates. Employee utilisation remained unchanged at 82.5% on a sequential basis, indicating that margin improvement was driven by operating performance rather than higher workforce utilisation alone.

It also expects Coforge to remain among the faster-growing IT services companies as enterprises continue investing in technology modernisation and artificial intelligence initiatives. According to the report, the company is expanding its growth drivers and has outlined an ambition to reach US$500 crore in revenue by FY30. The research team said management's execution track record gives it confidence in the company's ability to deliver on its long-term growth plans.

Reflecting the improved earnings outlook, Kotak Neo Research increased its earnings per share estimates for FY28 and FY29 by around 10-11%. It retained its Buy rating on the stock and revised its fair value upward to ₹2,000.

The report also highlighted a few areas that warrant monitoring. Margins in the Rest of the World geography showed limited improvement during the quarter, while segmental EBIT margins declined in both the Americas and EMEA regions. Despite these challenges, the research note said the company's overall execution, deal pipeline and growth outlook remained constructive.

Kotak Neo Research follows a 12-month investment horizon for its recommendations and has retained its Buy rating on Coforge, citing confidence in the company's earnings trajectory and long-term growth prospects.

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