Coforge FY25 Results: Strong Deal Pipeline Fuels 32% Growth, But Challenges Loom

Coforge FY25 Results: Strong Deal Pipeline Fuels 32% Growth, But Challenges Loom

Coforge Limited, a prominent player in the IT services sector, has reported an impressive 32% year-on-year growth in constant currency (CC) revenue for the fiscal year 2024-25 (FY25). This growth is attributed to a robust deal pipeline and significant order intake, including a $1.56 billion total contract value (TCV) deal in Q4. (Coforge, The Financial Express)

Q4 FY25 Performance Highlights

• Revenue: ₹3,409.9 crore ($403.5 million), up 47.1% YoY in INR terms.

• Net Profit: ₹261 crore, marking a 16.5% increase from the previous year.

• Order Intake: $2.1 billion in Q4, with five large deals signed across North America, the UK, and APAC.

• Executable Order Book: $1.5 billion for the next 12 months, a 47.7% YoY increase.

• EBITDA: $68 million, up 32.7% YoY, with a margin of 16.9%. (Coforge, The Times of India, ET Now)

FY25 Annual Performance

• Total Revenue: ₹12,050.7 crore ($1.45 billion), up 33.8% YoY in INR terms.

• Net Profit: ₹812 crore, a marginal increase from ₹808 crore in FY24.

• EBITDA: ₹1,998.2 crore, up 31.7% YoY.

• Headcount: 33,497 employees, a 35.5% increase since the beginning of the year.

• Attrition Rate: 10.9%, improved by 60 bps YoY. (The Financial Express, The Times of India, ET Now, Coforge)

Analyst Perspectives

Analysts have lauded Coforge's strong performance, with Nuvama Institutional Equities highlighting the company's industry-leading growth. They project over 20% revenue growth in FY26, coupled with margin expansion due to lower ESOP costs, potentially yielding a 25%+ earnings CAGR over FY25-27. (mint)

Antique Stock Broking maintains a 'Buy' rating, citing a robust deal pipeline and expectations of closing large deals in the short term. (Business Today)

Challenges Ahead

Despite the strong performance, Coforge faces several challenges:

• Macroeconomic Uncertainties: Global economic conditions could impact client spending and deal closures.

• Cost Pressures: While ESOP-related costs are expected to decline, other operational expenses may rise.

• Integration Risks: The acquisition of Cigniti Technologies brings integration challenges that need to be managed effectively. (Business Today, Coforge)

Outlook for FY26

Coforge's management remains optimistic, expecting organic revenue growth in FY26 to surpass FY25 levels. The company's strong order book and deal pipeline provide visibility into future revenues. (mint)

However, sustained growth will depend on navigating macroeconomic headwinds, managing costs, and successfully integrating acquisitions.