Coforge sees target price rises after strong Q2, revenue outlook promising

Coforge's Q2FY25 results have exceeded expectations, reinforcing its position as a top midcap IT pick. Analysts from leading brokerages have praised the company's strong performance, particularly its robust revenue growth and promising future outlook, despite concerns surrounding margins. With strong headcount additions and an impressive executable order book, the company's prospects for the coming quarters look bright.

Strong earnings drive target price increases

Several brokerages have responded positively to Coforge's results for the quarter ended September 30, 2024. Nomura maintained its 'buy' call on the stock, setting a target price of ₹8,480 per share, expecting double-digit revenue growth in FY25. The company's consistent headcount growth and a strong pipeline of large deals are expected to drive sustained revenue performance. If you're looking to buy shares online, this is an opportunity worth considering.

HSBC also reaffirmed its 'buy' rating, raising its target price to ₹8,200 per share. Analysts pointed to Coforge's organic growth and upcoming integration synergies, which are expected to further strengthen the company's revenue and margin outlook. The open offer for an increased stake in Cigniti is another key factor boosting confidence in the company's growth trajectory.

Margin concerns persist, but the outlook remains positive

While the overall outlook is optimistic, Citi has taken a more cautious approach, issuing a 'sell' call with a target price of ₹6,720 per share. The firm flagged concerns about Coforge's margins, which were in line with expectations but not as strong as some analysts had hoped. However, Citi did revise its earnings per share (EPS) estimates upward by 4-5% due to the consolidation of Cigniti, acknowledging the company's broad-based growth across verticals.

Despite the mixed views on margins, Coforge's performance has been impressive, and its shares have surged over 11% in recent trading sessions. If you're planning to buy shares online, Coforge's strong earnings growth and bullish price targets make it a potential addition to your portfolio.

Key takeaways

• Nomura and HSBC maintain 'buy' calls, with price targets of ₹8,480 and ₹8,200 per share, respectively.
• Coforge's headcount growth and strong pipeline support its near-term revenue outlook.
• Concerns over margins persist, but overall revenue growth remains strong, making it a top midcap IT pick.
• Buy shares online to capitalise on Coforge's promising future trajectory and potential gains.