Kolkata: Midcap AI stock Coforge share is in the news. Recently, this AI-based IT services company has been assigned an ‘Outperform’ rating by Hong Kong-based global brokerage CLSA. The broking firm has set a target price of Rs 2,426. Considering the market price of Rs 1,233.90, the upside potential signaled by this target price is XXX%. The growth potential remains firm, thinks CLSA. Incidentally, the price of this midcap fell significantly over the past few days, when there was a spectacular decline in the price of IT stocks due to the AI-led jitters that began in the US.
Coforge is a global digital services company that helps companies improve their businesses by adopting new technologies. It provides services in areas such as AI, cloud computing, data analytics, automation as well as product engineering. It can create custom-made solutions for different businesses. Technologies such as AI, cloud, automation and data analytics present a significant opportunity for Coforge. With a strong technical pool of expertise, the company is in a position to capitalise on these AI-driven opportunities.
Mega deal clinched by Coforge
The company, headquartered in Greater Noida, has concluded an agreement with a tenure of 13 years. The deal has been struck with Sabre Corporation of the US and it is valued at about $1.56 billion or more than Rs 13,000 crore. This long-term contract will provide Coforge with stable and predictable revenue, ensuring stable earnings for years. This deal will further strengthen the company’s presence in the travel technology and digital solutions sectors.
Risk elements
There is no immediate risk to Coforge. However, reports point out that Sabre has a high debt burden that can pose potential financial risk in future. The risk appears to be controlled by the agreement.
Stock performance
The stock has been under pressure for some time. The stock price has fallen by about 26% in the past one month. In the past six months, the stock went down by 30.14%. However, the stock has generated strong returns over the long term. The company has delivered returns of 37% in 3 years and 142% in 5 years. The company’s market cap was recorded at Rs 43,250 crore.
Financial performance
Coforge’s financial results justify its strengths in the market. In Dec quarter, its revenue jumped to Rs 4,188 crore Rs 3,258 crore in the similar period a year ago. The growth — 19%. Net profit also rose from Rs 256 crore in Q3FY25 to Rs 297 crore in Q3FY26. CLSA has flagged the following parameters:
ROCE: About 20%
ROE: About 16%
Debt-to-Equity ratio: 0.14
Dividend payout: About 59%
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