Coforge Q1 Review – Result Beat On All Count; Guidance Buoyant: Dolat Capital

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Coforge Ltd. reported sequential growth of 4.7% (our estimate: 4.9%) in constant currency terms led by sustained strong deal wins and traction in banking, financial services segment (grew 9.4% QoQ).

Ebit margin declined sharply by 304 basis points QoQ to 12.5% (our estimate: 14.9%) driven by wage hike (250 bps), investments in selling, general and administrative (100 bps) and adverse cross currency (20 bps) that was part mitigated by higher offshoring and operating leverage gains.

Announced interim dividend per share of Rs 13.

For FY23, Coforge has projected revenue growth guidance of atleast 20% in CC terms and is expects adjusted Ebitda margin (before employee stock ownership plan) in range of 18.5%-19.0%.

Management is confident on this guidance emanating from robust order book (up 26% YoY), improving prospects for travel vertical and healthy client conversation.

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