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Business Overview: COFORGE is a global digital services and solutions provider, ranked among the top 20 Indian software exporters, serving global clients like British Airways, ING Group, SEI Investments, Sabre, and SITA. Over the years, COFORGE has set up subsidiaries in the US, Singapore, Australia, UK, Germany and Thailand, mainly to market and mobilize projects for the software division. The company has business partnerships with large IT companies across the world.

How is COFORGE set to outgrow peers despite macro challenges?

COFORGE is well-positioned to lead industry growth in FY26 due to several key strengths

• Firstly, the company’s disciplined execution and unique intensity in delivering results sets it apart from peers. COFORGE emphasizes growth through solution-based, proactive large managed services deals, focusing on expanding wallet share within existing clients rather than relying solely on client budget increase. This strategy ensures resilience through economic cycles, supported by a strong signed order book and a robust deal pipeline. • Having a proven history of building deep pools of specialized architects and industry-specific experts further differentiates COFORGE from peers. Despite macroeconomic fluctuations the company’s strategic pivot towards large deals is quite instrumental in the growth and profitability that it has witnessed so far. • Looking ahead, COFORGE aims to exceed USD 2Bn in revenue sooner than as anticipated in FY27, with EBITDAM guidance around 18%, translating to approximately 14% EBITM by FY26. The company’s growth is fuelled by multiple vectors, like large deal wins (including the landmark Sabre deal and a significant USD 62Mn contract from a major Cigniti client in Q4FY25), scalable GPU-as-a-service offerings, AI-led quality engineering for banking clients, Salesforce-driven wins,. These opportunities, aligned with trends in AI-driven transformation and legacy modernization, underpin COFORGE’s robust growth outlook.

Why Invest in COFORGE?

COFORGE posted a strong Q4 with record order intake of USD 2.1Bn, including 5 large deals. Capitalizing on targeted growth, it achieved a 75% YoY rise in annual TCV to USD 3.5Bn. Its executable order book rose 48% YoY to USD 1.5Bn, outpacing peers’ cautious FY25 outlook. The frequency and median size of large deals at COFORGE have steadily risen, reflecting its strong executional capabilities. During FY25 the company has witnessed broad-based growth, with notable expansion across its Top 5, Top 10, and Top 20 clients. The USD 1.56Bn Sabre deal has transitioned smoothly, progressing further with ramp-ups. COFORGE’s confidence in sustaining long-term growth stems from a well-diversified portfolio across service offerings. Growth is being driven across geographies, industry verticals, and service lines. Thus, we believe that this balanced approach positions COFORGE for sustained momentum in the coming quarters. We project Revenue/EBIT/PAT to grow at a CAGR of 22.1%/ 31.0%/ 49.0% respectively over FY25-FY27E.

Valuation: We currently have a ‘BUY’ rating on the stock with a target price of INR2,153.

Key Risks:

Slower TCV Conversion: Amidst of global macro-economic challenges there is possibility of Clients spending gradually thereby slowing down the actual revenue conversions from TCV won, which we believe could be a key risk factor to the company’s growth and profitability in FY26.

Currency exchange volatility: Fluctuations in foreign currency exchange rates can affect profit margins and financial stability, especially in global contracts.

Geopolitical Policy Impact on IT sector: A significant portion of the company’s revenue is derived from the US market. Policy shifts under the Trump administration and global geopolitical tensions may reduce capital flows into the IT sector, leading to short-term investment slowdowns and impacting growth.

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