Coforge Long-Term Investment Outlook + Is Its Current Valuation Reasonable?

Coforge’s business and competitive advantages

Coforge (formerly known as NIIT Technologies) is an Indian IT services company that offers software solutions, digital transformation, cloud infrastructure, data, and AI services.

The company’s clients are distributed across Europe, America, Australia, and Asia, which helps to mitigate the impact of economic or policy risks from a single region.

Financial performance and growth trends

• The latest financial report shows a significant increase in contract signing scale. FY25 new order performance is strong.
• Revenue and profit margins are expected to improve with cost control and economies of scale.
• The company has set a goal to achieve 2 billion USD in revenue by FY27, which represents a more aggressive growth target compared to approximately 1.4 billion USD in FY25.

Current Valuation Comparison and Reasonableness

• The current stock price is around ₹1,760-₹1,770.
• PE (TTM) is in the range of 58-62 times, which is higher than many Indian IT companies, but considering its growth expectations and margin improvements, the premium may be reasonably justified.
• The market capitalization is approximately ₹58,000-₹59,000 billion rupees.
• If the company’s growth meets expectations in the next 1-2 years, the stock price could reach ₹1,900 or even ₹2,000, but if expectations are not met, there is a risk of a pullback.

Long-term goals and potential risks

Objective:

• Revenue is moving towards the target of 2 billion dollars.
• Increase net profit and ROE, maintain profit margin improvement.
• Increase investment in the fields of AI and cloud services.

Risk:

• Under global economic uncertainty, customer spending is tightening.
• Personnel costs and exchange rate fluctuations affect profit margins.
• Overvalued, if growth does not materialize, the stock price faces correction risks.

Advice for long-term holders

• If you are optimistic about the Indian IT industry and the global digitalization trend, you may consider gradually building your position, rather than investing heavily all at once.
• It is recommended to buy in batches or to position at support levels to reduce risk.
• Continuously tracking the signing of contracts and the improvement of profit margins is key to judging stock price trends in the future.