Rs 19/Share Dividend Soon: Brokerages Jefferies, Elara Raise Target Price In Coforge, 19-31% Upside Seen

1 tech giant, Coforge is the brokerage's favourite after eking out growth despite the IT struggling in challenging macro uncertainties. Brokerages like Jefferies and Elara Capital have raised their target prices on Coforge. The share price of Coverage is expected to rise as high as Rs 8,100, with a potential upside of 19% to 31%. Not just a double-digit returns outlook, but Coforge is also going to reward shareholders with dividend payout.

Coforge Dividend:

As per the regulatory filing, Coforge declared an interim dividend of Rs 19 per share having a face value of Rs 10 each for FY24. The record was fixed on February 5, 2024, to ascertain the eligibility of shareholders for payment of Interim dividends.

In percentage terms, the dividend payout is at 190%.

Currently, the company has a dividend yield of 1.03%.

Last year, the company paid a series of dividends taking the total payout to 760% amounting to Rs 76 per share.

Coforge Q3 Results:

In Q3FY24, the company reported a consolidated PAT of Rs 2,380 million, up 31.5% Q-o-Q, while revenue for the quarter stood at Rs 23,233 million and $282 million. Notably, revenue was up Q-o-Q by 1.8% in constant currency, 1.4% in USD and 2.1% in INR terms, and up Y-o-Y by 12.0% in CC, 12.0% in USD and 13.0% in INR terms. Reported EBITDA margin at 17.3%, improved by 201 bps Q-o-Q.

Coforge's order intake was $354 million, eight consecutive quarters of $300+ million deal wins. Total order book executable over the next 12 months at $974 million, up 15.8% Y-o-Y. LTM attrition stood at 12.1%.

Coforge Share Price;

On Thursday, Coforge's share price ended at Rs 6,206.05 apiece, down by 2.38% on BSE with a market cap of Rs 38,323.87 crore.

There is a buy-on-dips strategy in Coforge.

Coforge Outlook:

Brokerages like Jefferies and Elara Capital are the latest to raise their target price of Coforge.

Jefferies in its research report said, "Coforge's 3Q revenues were ahead but profits missed due to lower than expected margins. While fresh bookings were soft, strong 16% YoY growth in executable order books should support mid-teens growth even in an uncertain demand environment. Also, sharp fall in average. employee costs should support margin expansion. We maintain our FY25-26 estimates and expect a 28% EPS Cagr over FY24-26E. Maintain BUY with revised PT of Rs7,400 based on 32x PE."

Meanwhile, Elara Capital's note said, that Coforge reported in-line revenue growth at 1.4% QoQ USD as also in-line EBIT margin at 13.8%. The traction came in from North America and RoW within geographies and BFS among verticals. Pipeline continued to be robust at USD 974mn, up 4% QoQ. Within service lines, BPS saw weakness, while growth was led by cloud (up 4% QoQ), Data integration (+7%) and ADM (+4%). EBIT margin rose 200bps QoQ, supported by increased offshoring, increased fixed-price contracts and a 70bps rise in gross margin. The print looks robust and near-term visibility is intact with a robust executable order book.

On the valuation, Elara's note said, "FY24 revenue growth guidance (of 13-16% in CC) is intact, on TCV of USD 974mn executable order book. We retain our positive stance given: 1) improving executable order book and steady large deal wins, 2) consistent revenue growth and 3) traction in BFS. We marginally tweak FY25E/26E earnings estimates ~1-4% each. Maintain Buy with higher TP of Rs 8,100 from INR 6,230, on 33.2x Dec-25E EPS (five-year average +1 sd; versus 27.3x earlier)."

From the current market price, there is a potential upside of 19% to nearly 31% in Coforge.

Coforge is a global digital services and solutions provider, that leverages emerging technologies and deep domain expertise to deliver real-world business impact for its clients. The firm has a presence in 21 countries with 26 delivery centers across nine countries.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.