Coforge Stock Dips: Brokerages Downgrade After Q4

by | May 6, 2024 | 0 comments

Coforge Stock Latest Update:

On May 3, Coforge stock prices were seen falling nearly 7% in the first few minutes of trading after downgrades from brokerage firms came out following the company’s announcement of weak financial results for Q4 FY24.

As at 9:17 am, Coforge stock on Bombay Stock Exchange (BSE) were at Rs 4,646.60 apiece, down Rs 339.50 or 6.81%.

For March quarter FY24, the IT services company reported a consolidated net profit of Rs 229.2 crore, a decline of 5.6% QoQ; and revenue from operations grew modestly by 1.5% sequentially to Rs 2,358.5 crore.

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Profit jumped by 94.8% YoY from Rs115cr to Rs223.7cr; revenue grew by 8.6% YoY. The board also declared a fourth interim dividend of Rs19 per equity share for FY23-24.

Foreign research firm Jefferies downgraded Coforge to ‘underperform’ and cut target price to Rs4,290 per share citing weak Q4 performance (missed estimates due to lower-than-expected margins); absence of growth guidance for FY25 suggests higher uncertainty; recent large acquisition introduces additional execution risks justifying lower rating.

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InCred also downgraded the stock to ‘reduce’, setting new target price at Rs4,431 per share highlighting that while acquisition of Cigniti adds capabilities and diversifies geography & verticals but it necessitates ~6% cut in estimated EPS CAGR for FY24-26E.

Separately, Coforge has entered into agreement to acquire approximately 54% stake in Cigniti Technologies at Rs1,415/share; deal expected to close in Q2FY25 subject to regulatory approvals

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