Coforge’s record order book and Encora synergies support accelerating growth outlook

Investment View and Valuation

Prabhudas Lilladher’s July 28, 2026 result update describes Coforge’s Q1 FY27 performance as in line, while viewing the outlook as more encouraging. The broker retains its BUY rating and raises its target price to Rs 2,120 from Rs 1,980. The target is based on assigning a 28 times multiple to FY28E EPS.

The core investment case is supported by record deal activity, a strong executable order book, Encora integration and cross-sell potential, and early cost synergies.

Q1 FY27 Financial Performance

Coforge reported Q1 FY27 IT services revenue of US$592.2 million, up 22.3 per cent quarter on quarter in constant-currency terms and 21.1 per cent in US dollar terms. This was broadly in line with Prabhudas Lilladher’s estimate of 22 per cent constant-currency growth.

Reported organic revenue growth was 1.1 per cent quarter on quarter in constant currency, but increased to 5.2 per cent after excluding planned portfolio exits. Healthcare, Insurance, BFSI and Travel, Transportation and Hospitality recorded organic constant-currency growth of 11.6 per cent, 4.6 per cent, 2.9 per cent and 1.7 per cent respectively. The Government segment declined 8 per cent because of the discontinuation of a low-margin portfolio. The Americas and EMEA drove geographic growth.

The EBIT margin was slightly below the broker’s 16.2 per cent estimate but above consensus at 15.6 per cent and above the full-year FY27E guided band. Early Encora synergies supported profitability, with an approximately 40 per cent reduction in general and administrative expenses being the principal contributor to stronger-than-expected margins.

Deal Momentum and Growth Outlook

Management commentary was incrementally constructive. Management anticipates closing its highest-ever large strategic deals in Q2 FY27, following four large-deal wins in Q1 FY27. Fresh order intake was US$691 million, up 6.5 per cent quarter on quarter excluding Encora, while the next-12-month executable order book reached a record US$2.23 billion, up 44 per cent year on year.

Prabhudas Lilladher believes these metrics provide healthy visibility for H2 FY27 growth. Successful Encora integration would broaden Coforge’s client portfolio and allow strategic accounts to scale into higher revenue bands. The broker also sees the Neuron platform and ModSquad practice generating leads within these accounts.

• Outcome-based revenue accounts for 6–7 per cent of revenue.
• AI-led Engineering, Data and Cloud revenue contributes 86 per cent.
• The broker expects deal activity and Encora cross-sell opportunities to support sustained double-digit organic growth.

Estimates and Margin Outlook

Prabhudas Lilladner retains its FY27E and FY28E constant-currency revenue-growth estimates at 43 per cent and 15 per cent year on year respectively, citing the deal pipeline and Encora cross-sell opportunities.

The broker marginally raises its FY27E and FY28E EBIT-margin estimates to 15.5 per cent and 15.6 per cent from 15.3 per cent and 15.5 per cent respectively. The revisions reflect early Encora synergies, operating leverage and the expected deferral of wage hikes.

The report notes that margins could sustain or improve through continuing integration synergies, further Encora general and administrative savings from Q2 FY27 and the absence of likely wage hikes in FY27.