COFORGE - Coforge

📊 NSE: COFORGE 🏢 Computers - Software - Medium / Small 📅 Last Updated: 12/13/2025 21:08

💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue grew 31% YoY to INR 12,091 Cr in FY25. H1 FY26 segment growth: Travel, Transport, and Hospitality (TTH) grew 61%, Banking and Financial Services (BFS) grew 17%, Insurance grew 6%, and Government (outside India) grew 15%.

Geographic Revenue Split

Americas contributed 59.2% of revenue in Q2 FY26, followed by Europe, Middle East, and Asia (EMEA) at 30.4%, and other geographies at 10.4%.

Profitability Margins

Operating margin for H1 FY26 stood at 17.1%, an improvement from 14.4% in the previous corresponding period. FY24 operating margin was 15.5%.

EBITDA Margin

EBITDA margin is expected to sustain at 17-18% over the medium term. FY25 margin was lower at 14.3% due to one-off Cigniti integration and QIP costs.

Capital Expenditure

Planned capital expenditure is approximately INR 500 Cr per annum to support operations and infrastructure.

Credit Rating & Borrowing

Long-term credit rating reaffirmed at CRISIL AA/Positive; short-term rating at CRISIL A1+. Borrowing costs include a Thai Baht-denominated loan of USD 23 million at an interest rate of ~3.5%.

⚙️ Operational Drivers

Raw Materials

Not applicable for IT services; human capital and software integration are the primary cost drivers.

Import Sources

Not applicable for IT services.

Capacity Expansion

Order book expanded ~6x to USD 3.5 billion in FY26 from USD 507 million in FY18, supported by steady large-deal wins in Travel and BFSI.

Raw Material Costs

Not applicable; however, integration costs from the Cigniti acquisition reduced FY25 margins to 14.3% from 15.5% in FY24.

Manufacturing Efficiency

Underwriter productivity in the insurance segment improved by 15% through AI-led transformation, increasing monthly submission reviews from 1,600 to 4,500.

Logistics & Distribution

Not applicable for digital IT services.

📈 Strategic Growth

Expected Growth Rate

25-30%

Growth Strategy

Coforge will achieve growth through the integration of Cigniti Technologies (INR 2,109 Cr acquisition), which adds Retail, Hi-tech, and Healthcare verticals. This is supported by a USD 3.5 billion order book and the adoption of AI-led engineering solutions to drive cross-selling and value-based deal execution.

Products & Services

IT services including Engineering (46.1% of revenue), Data and Integration (21.2%), Cloud and Infrastructure Management (17.1%), Intelligent Automation (7.8%), and Business Process Management (7.8%).

Brand Portfolio

Coforge, Cigniti.

New Products/Services

AI Submission Center for insurers, which reduced re-keying costs by 20% and improved underwriter capacity by 15%.

Market Expansion

Expansion into Retail, Hi-tech, and Healthcare verticals via Cigniti; merging Cigniti as a wholly-owned subsidiary by April 01, 2025.

Market Share & Ranking

Mid-tier player in the Indian IT industry with FY25 consolidated revenue of INR 12,091 Cr.

Strategic Alliances

Share swap arrangement with Cigniti minority shareholders (46%) to consolidate ownership.

🌍 External Factors

Industry Trends

The IT industry is shifting toward AI adoption and niche domain expertise. Coforge is outperforming the industry's single-digit growth with a 31% revenue increase in FY25 by focusing on high-growth verticals like TTH.

Competitive Landscape

Intense competition from large top-tier IT firms and other mid-tier players in the Indian IT services sector.

Competitive Moat

Moat is derived from deep domain expertise in Travel (23.3% of revenue) and Insurance (15.1%), leading to >90% repeat business. This specialization creates high switching costs and sustainable outperformance relative to peers.

Macro Economic Sensitivity

Highly sensitive to US GDP and corporate spending trends, as the Americas account for 59.2% of total revenue.

Consumer Behavior

Increased demand for AI-led automation and cloud migration among BFS and Insurance clients to improve operational productivity.

Geopolitical Risks

Concentration risk in the US (59.2%) and EMEA (30.4%) markets exposes earnings to region-specific structural challenges.

⚖️ Regulatory & Governance

Industry Regulations

Compliance with SEBI Listing Obligations and Disclosure Requirements (LODR) for corporate governance; adherence to international data and service standards.

Environmental Compliance

Commitment to SBTi to set net-zero targets; ESG profile supports the company's credit risk profile.

⚠️ Risk Analysis

Key Uncertainties

Integration risks from the Cigniti acquisition could impact margins (FY25 margins fell to 14.3% from 15.5%). US market concentration (59.2%) remains a primary geographic risk.