Motilal Oswal has a ‘Buy’ rating on Coforge, with a target price of Rs 2,200, implying an upside of 18%. The brokerage expects that the company has a strong executable order book and resilient client spending across verticals that bodes well for its organic business.
Motilal Oswal on Coforge: Management confident of organic growth
Coforge’s management reiterated its target of reaching $2 billion in revenue by FY27, driven by strong organic momentum and cross-selling opportunities from Cigniti. Coforge scaled its revenue from around $400 million in FY17 to $1.4 billion in FY25, a 17% CAGR—the highest among peers. With an executable order book of $1.5 billion, which is up 47% year-on-year, near-term revenue visibility remains high, and management expects organic growth in FY26 to outpace FY25 levels.
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The company’s BFSI and transportation verticals remain core growth engines, each delivering over 20% YoY growth in FY25 despite a challenging macro environment. Adding to that, Coforge‘s margin outlook is constructive, with one-offs behind and levers like delivery mix and lower ESOP costs offering 100-120bp upside by FY27.
Motilal Oswal on Coforge: Margins to expand to 18% by FY27
The company’s margin guidance remains constructive. Plus, there is room for upside as one-offs normalise. “We expect EBITDA margins to expand 100-120 basis points over the next 12-18 months, with management guiding for 18% reported EBITDA margin by FY27,” said Motilal Oswal.
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Coforge’s FY25 adjusted EBITDA margin stood at 18%, which was weighed down by one-time M&A-related costs, including the Cigniti integration, Rhythmos acquisition, and the AdvantageGo divestment. With most of these one-offs now behind, margin pressures are expected to ease going forward, said Motilal Oswal.
The company expects the reported EBIT margin to expand materially in FY26 and reach 14% by FY27. “Cigniti may prove to be an effective long-term asset,” said Motilal Oswal.
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