Shares of Coforge dipped nearly 2% to INR 5,015 each on Friday, following a downward revision in target prices by Nomura and Citi to INR 6,310 and INR 4,215 respectively. The price adjustment came on the heels of a 10% year-on-year (YoY) decrease in the company's Q2 net profit, which stood at INR 181 crore ($24.3 million). The decrease was attributed to an increase in one-off Employee Stock Ownership Plan (ESOP) costs.
In terms of performance, InvestingPro data shows that Coforge is a prominent player in the IT Services industry that operates with a high return on assets. This aligns with its consistent increase in earnings per share and the fact that it has raised its dividend for 4 consecutive years.
Despite a sequential increase of 9.5% in Profit After Tax (PAT), the figure fell short of the estimated INR 240 crore ($32.2 million) as projected by Zee Business Research. The company's operations revenue for the quarter saw a significant YoY rise of 16%, amounting to INR 2,276.2 crore ($305.7 million).
By mid-morning trading hours, Coforge's shares were trading at INR 5,013.95 each, with a market capitalization of INR 30,859.95 crore ($4.15 billion). The company's shares have seen an upward trend this year, with an overall increase of over 26%. This aligns with the InvestingPro Tips that Coforge's stock generally trades with low price volatility and has seen a large price uptick over the last six months.
Brokerage firms Jefferies, HSBC (LON:HSBA), and Macquarie maintained 'Buy' and 'Outperform' ratings on Coforge's stocks. Despite the downward revision in target prices, Nomura held onto its 'Buy' stance on the company's shares. On the other hand, Citi continued to maintain its 'Sell' call.
Looking ahead, Coforge reiterated its revenue growth forecast for fiscal years 2023-24 at 13–16%. The IT services firm seems to be maintaining confidence in its performance despite the hit to its Q2 net profit. As per InvestingPro Tips, the company is predicted to be profitable this year and operates with a moderate level of debt. For more insightful tips about Coforge, check out InvestingPro, where 16 additional tips are available.
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