Coforge shares up 11% today, stock still down 23% YTD; should you buy?

Shares of Coforge Ltd climbed 11 per cent in Wednesday's trade amid industry-wide concerns over a slower-than-expected recovery in discretionary spends, uneven recovery in a few verticals and possible disruption from AI adoption of enterprises. Kotak Institutional Equities said it sees the fall as an attractive opportunity, as the brokerage upgraded the stock to 'Buy' today, with an fair value of Rs 9,000.

The stock rose 11.14 per cent to hit a high of Rs 8007.35. The stock is down 23 per cent in 2025 so far.

The stock has been in news of late after Coforge announced a material contract with Sabre. The 13-year contract has a total contract value of $1.56 billion and revenues from the engagement could be front-ended. Coforge also approved a stock split, converting one share with a face value of Rs 10 into five shares, each with a face value of Rs 2. Coforge's subsidiary, Coforge INC, has reached an agreement to purchase all outstanding shares of Rythmos Inc for an initial consideration of $30 million.

Additionally, Coforge Technologies Australia Pty Ltd, a subsidiary of Coforge, has agreed to enter into a share sale agreement with TMLabs Pty Ltd, with an initial purchase consideration of AUD 20 million.

"Coforge has secured its largest deal ever, potentially adding $80-120 million in revenue for FY26. Currently stock trades at 27 times PE tits FY27E EPS of 270. We have an Accumulate rating on the stock with TP INR 10,529 per share," said Arihant Capital Markets.

Kotak said the Sabre deal demonstrates Coforge’s sales prowess and strong solutioning capabilities in the TTH vertical. The deal carries a few risks, owing to Sabre undergoing a transition phase and its weak financial position, it said.

"We had already baked in the benefit from the healthy pipeline conversion in our FY2026-27 revenues. Our EBIT margin estimates are down by 50-60 bps, driving a 4-5 per cent lower EPS. We see the 18 per cent decline in the stock price over the past three months as an attractive opportunity. Upgrade to BUY, with an FV of Rs 9,000," Kotak said.