Coforge's shares reached a new all-time high of ₹7,284.35 on Monday, surging 2% during intra-day trade on the Bombay Stock Exchange (BSE). This impressive performance comes as the company declared its second interim dividend of ₹19 per equity share for the financial year 2024-25. For investors looking to invest in stocks, this recent announcement adds to the attractiveness of Coforge, which has been performing exceptionally well in recent months.
The stock surpassed its previous record of ₹7,245, set just days earlier on October 3, 2024. Coforge has scheduled October 11, 2024, as the record date to determine which shareholders are eligible for this second interim dividend. This follows the first interim dividend of ₹19 per share that was issued in May 2024.
Impressive growth in stock value
Coforge’s stock has shown remarkable growth, appreciating by 65% over the past five months. The share price had dropped to a 52-week low of ₹4,291.05 on May 9, 2024, making its current value an impressive rebound. Analysts attribute this growth to the company's strong order book and a resurgence in its Banking, Financial Services, and Insurance (BFSI) segment, which has improved revenue visibility and performance.
Analysts' take on Coforge’s future
Centrum Broking analysts have noted that Coforge’s focus on operational efficiencies, such as improving the employee pyramid and increasing offshore and utilisation rates, will drive further margin improvements. They have also revised the company’s price-to-earnings (PE) multiple from 24x to 30x, highlighting their confidence in the company’s future growth.
Additionally, analysts expect Coforge’s valuation to trade at a premium of 25%-30% over Tier 1 IT companies. This is due to its stronger growth outlook and increasing demand in the BFSI segment, which accounts for approximately 50% of the company’s revenue. However, despite these positive forecasts, Coforge’s stock is currently trading above the target price of ₹7,140 per share set by some brokerage firms.
Upcoming financial results and order book strength
Coforge’s board of directors is scheduled to meet on October 22, 2024, to review and approve the unaudited financial results for the quarter and half-year ending on September 30, 2024. Market experts believe that the results will reflect the company’s healthy executable order book and improved client spending in the BFSI sector, which should continue to drive organic growth.
Expanding global operations
Coforge provides IT-enabled services across several regions, including the Americas, Europe, the Middle East, Africa, India, and the Asia-Pacific region. The company serves multiple sectors, such as financial services, insurance, travel, manufacturing, and government, through its wide range of offerings, including application development, managed services, and business process outsourcing.
The company's strong global presence and its ability to secure large deals, such as a $400 million contract signed in Q4FY24, have added to its revenue stability. This significant contract has helped offset the broader revenue slippages seen in the IT sector.
Future targets
Coforge’s management has laid out a roadmap to achieve a revenue milestone of $2 billion in the coming years. This target will be supported by scaling key accounts, expanding into new verticals, growing its partner ecosystem, and pursuing acquisitions. For those looking to invest in stocks, Coforge's clear growth strategy and strong order pipeline make it a promising player in the IT services sector.
With a record executable order book of $1.02 billion, the company is well-positioned for future success and ensures long-term value for its shareholders.
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