Coforge share price: MOFSL says 'Buy' IT stock for 18% upside; here's why

Buy Coforge Ltd shares for 18 per cent upside, MOFSL said in a note on Wednesday. The brokerage suggested a target price of Rs 2,200 on the IT stock, saying the executable order book has set the floor for a solid FY26.  

MOFSL said it continues to view Coforge as a structurally strong mid-tier player well-placed to benefit from vendor consolidation/cost-takeout deals and digital transformation. Cigniti could also prove to be an effective long-term asset, it said valuing Coforge at 38 times estimated FY27 EPS. The brokerage reiterated its 'Buy' rating on the stock.

MOFSL, which met the company CFO, said the midcap IT firm has reaffirmed its ambition to achieve $2 billion in revenue by FY27, supported by strong organic growth and cross-selling opportunities arising from the Cigniti acquisition. 

The company boasts an executable order book of approximately $1.5 billion, up 47 per cent year-over-year, which offers near-term revenue visibility. The COforge management anticipates that organic growth in FY26 will exceed FY25 levels.

Both the BFSI and transportation verticals continue to serve as key growth drivers, each posting over 20 per cent YoY growth in FY25, despite a tough macroeconomic backdrop. 

On the margin front, MOFSL said the outlook remains positive, with one-off impacts now behind and structural levers—such as improved delivery mix and lower ESOP costs—potentially boosting margins by 100–120 basis points by FY27.

"We expect Ebitda margins to expand 100-120 bps over the next 12-18 months, with management guiding for 18 per cent reported Ebitda margin by FY27. COFORGE expects reported EBIT margin to expand materially in FY26 and reach 14 per cent by FY27. ESOP costs are also expected to decline 80 bps by 2HFY26, providing further tailwinds to margin expansion," MOFSL said.

It said Coforge has proactively de-risked the engagement through credit insurance, and Sabre’s ongoing deleveraging further strengthens its confidence.  The management indicated that the Sabre ramp-up is on track and, expressed confidence that it will not be margin dilutive, supported by steady execution and a favorable offshore delivery mix.

"We value COFORGE at 38x FY27E EPS, setting a target price of Rs 2,200, which implies an 18 per cent upside from current levels. We reiterate our BUY rating on the stock," MOFSL said.