Motilal Oswal - Coforge (COFORGE) MOSL: COFORGE (Neutral) - Strong all-round delivery; valuation remains full

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Motilal Oswal

Mukul Garg

EUR 120.00 For Business Accounts Only

MOSL: COFORGE (Neutral) - Strong all-round delivery; valuation remains full

COFORGE: Strong all-round delivery; valuation remains full

(COFORGE IN, Mkt Cap USD3.9b, CMP INR4745, TP INR4760, Neutral)

Robust FY22 performance priced in

Coforge Ltd (COFORGE) reported strong organic revenue growth of 7% QoQ CC in 1QFY22, above our estimates of 3% QoQ CC. Including the two months of revenue contribution from SLK, revenue growth stood at 16% QoQ (USD), far higher than our exp. of 10.3% QoQ. Growth was driven by deal ramp-ups in the Americas (+30% QoQ, including the SLK impact). It reported another quarter of strong order intake of USD318m (the highest ever), implying 1.6x book-to-bill. This also included three large deals, with one USD105m deal win.
The EBITDA margin (pre-RSU) declined 110bps QoQ to 16.1%, weighed by wage hikes, visa costs, and the transition impact from large deals. Strong net additions (1,138 organically) resulted in a drop in utilization by 400bps QoQ.
While the management increased its FY22 organic revenue growth guidance to at least +19% YoY CC (+200 bps v/s 4QFY22), we expect the company to grow at a much faster pace (c25% YoY CC). The management further mentioned it does not see any headwind to growth and that the guidance is conservative. Given the strong demand tailwind as well as all-time high deal wins and a healthy pipeline, Coforge should continue to grow strongly in FY23 as well.

29/07/2021 10 EN

Underlying

Coforge

NIIT Technologies Ltd is an India-based Information technology (IT) solutions company. The Company is engaged in application development and maintenance, managed services, cloud computing and business process outsourcing to organizations in several sectors such as banking and financial services, insurance, travel and transportation and logistics, manufacturing and distribution and government. The Company is combined with capabilities in data and analytics, automation, cloud and digital, is enabling to drive business transformation. The Company offers Tron intelligent automation, digital process transformation, application services, business process services, cyber security, among others. It serves industries such as travel and transportation, insurance, banking and financial services and enterprise services.

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INE591G01017 National Stock Exchange of India India

Provider

Motilal Oswal

Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.

Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.

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Analysts

Mukul Garg

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MOSL: COFORGE (Neutral) - Strong all-round delivery; valuation remains full

Coforge Ltd: 2 directors

MOSL : COFORGE: Strong growth outlook factored in the valuation

Coforge’s Copasys Automated Compliance Audit and Quality Assurance Platform Receives US Patent

MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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