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Our takeaways from the Board of Directors call

* Coforge has seen two independent directors exit within four days. NonExecutive Independent Chairman Mr. O. P. Bhatt resigned with immediate effect on 8th Sep’26, followed by Independent Director and NRC Chairperson Mr. D. K. Singh on 11th Sep’26. The trigger was an internal audit of the Board Evaluation Exercise, which identified gaps in the way the evaluation findings were circulated and presented to the board. The board has since appointed Mr. Vivek Sharma as interim Chairman.

* The internal audit, conducted by KPMG as part of its audit plan, found that the reports were routed only to Mr. Bhatt and Mr. Singh, while key findings were not included in the presentations made to the board, such as the Chairman’s own performance category receiving the lowest rating in the exercise. Coforge has stated that the reports were withheld from other board members, including independent directors, on Mr. Bhatt’s instructions.

* Coforge, on Monday, 14th Sep’26, hosted a conference call, in which management and independent directors joining the call to address this matter.

Key points discussed in the call:

1) The board has commenced the process of finding a new independent chair, who will be appointed by 31st Jan’27, when the term of the current interim chair ends.

2) The search for two independent directors was also confirmed, which should lift the number of independent directors on the board to five from three currently.

* Our view: We believe the call allayed concerns around misalignment between the board and the management, with independent directors Ms. Beth Boucher and Mr. Anil Chanana chipping in for key questions. That said, board composition is now a key monitorable: Advent holds ~21% of Coforge following the Encora transaction, with two nominee director seats under the agreed shareholding thresholds. However, while Interim Chair Mr. Sharma is classified as independent, he also serves as Senior Advisor for AI at Advent. Hence, normalization of Advent representation on the board is key.

* We have kept our estimates unchanged following this development. We continue to expect Coforge to be the growth leader within our coverage universe and reiterate it as our top pick. Strong deal wins, continued execution, improving cash conversion, and further margin upside from the Encora integration support our medium-term growth outlook.

* We continue to value Coforge at 29x FY28E EPS with a TP of INR2,200, implying 19% upside. Reiterate our BUY rating

Valuations and view: Financial performance solid, board clarity awaited

* We will monitor how the board is reconstituted, including the new chairman. That said, Coforge’s financial performance has been solid in recent times, underpinned by strong growth, improving cash flow conversion, as well as margins (dated 28th July, 2026: Coforge 1QFY27 Results note: Ticks all the boxes).

* We have kept our estimates unchanged following this development. We continue to expect Coforge to be the growth leader within our coverage universe and reiterate it as our top pick. Strong deal wins, continued execution, improving cash conversion, and further margin upside from the Encora integration support our medium-term growth outlook.

* We continue to value Coforge at 29x FY28E EPS with a TP of INR2,200, implying 19% upside. Reiterate our BUY rating.

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