Motilal Oswal Maintains Buy Call on Coforge, Sets Price Target at Rs 1880

Coforge Ltd (COFORGE) Research Report

Key Highlights

• Coforge Ltd has underperformed its mid-cap peers by 2-9% since the US-Iran conflict broke out, with a decline of 9-10% (45% from its peak).
• The company's relatively higher exposure to the travel vertical and Middle East market are contributing factors to its underperformance.

Valuation Analysis

Read also: SpaceX Seeks Record $75 Billion IPO, Potentially Positioning Elon Musk as the World's First Trillionaire

• Coforge Ltd trades at 20x FY28E P/E, assuming a bear case of 10% organic constant currency growth rate in FY27/FY28E.
• At current levels, valuations appear attractive, with a P/E ratio of 19x/15x FY27/28E.
• The company's strong executable order book and resilient client spending across verticals support its organic business growth.

Outlook and Recommendation

• We believe the stock is currently pricing in an extreme bear-case scenario.
• Factoring in risks related to the travel vertical and AI-related uncertainties in IT services, we pare our estimates by 4-6% and lower our target multiple to 26x (from 32x).
• Our valuation of Coforge Ltd is INR1,880, implying a 73% upside.