Coforge tumbles 6 per cent after Q2FY22 result misses street estimates

The board has recommended an interim dividend of Rs 13 per share, and the record date for this payout will be November 8, 2021.

India’s leading global IT solutions organization recently announced its financial results for the quarter ended September 30, 2021. The company reported strong growth in revenue, significant expansion in EBITDA margin and has continued increase in its billable headcount. Deal flow has been robust with three large deals secured.

Revenues for Q2FY22 stood at Rs 1,569.4 crore (i.e. USD 212.8 million), which is up 37.4 per cent in dollar terms and 36 per cent in rupee terms on a year-on-year basis. It has climbed up 6.5 per cent in dollar terms and up 7.4 per cent in rupee terms, sequentially. Profit after tax (PAT) for the quarter increased 22.8 per cent in dollar terms to USD 19.9 million and 21.6 per cent in rupee terms to Rs 146.7 crore on an annual basis.

The board has recommended an interim dividend of Rs 13 per share, and the record date for this payout will be November 8, 2021.

The company’s total order book executable over the next twelve months has expanded by 40.6 per cent on a year-on-year basis to USD 688 million as of September 30, 2021. Order intake during Q2FY22 was USD 285 million, on the back of three large deals secured out of which two were north of USD 50 million TCV each. The total headcount at the company after including the employees of the recently acquired SLK Global increased to 20,786 during the quarter under review.

Sudhir Singh, CEO of Coforge states in a filing with the exchange, “Our investments in product engineering, cloud, data, automation and integration capabilities continue to power our path to being a USD 1 billion-plus firm next year. This is a landmark year for the firm as we anticipate that we shall grow revenues by at least 35 per cent and our adjusted EBITDA by at least 40 per cent over the previous year. Our ability to significantly improve margins in a supply-constrained and escalating costs context, while simultaneously driving exceptional growth is a testament to the execution capabilities of team Coforge.”

In view of sustained deal wins and incremental business from its customer base, the company is now planning for a growth (excluding SLK Global contribution) of at least 22 per cent in constant currency terms during FY22, which is higher than the at least 19 per cent growth indicated earlier. This translates to at least 35 per cent of consolidated (including SLK Global) growth in constant currency terms for the firm in FY22. The firm continues to target an adjusted EBITDA margin of 19 per cent for the year.

Coforge is a leading global IT solutions organization, enabling its clients to transform at the intersection of domain expertise and emerging technologies to achieve real-world business impact. A focus on very select industries, a detailed understanding of the underlying processes of those industries and partnerships with leading platforms provides them with a distinct vantage. The company leverages AI, cloud and insight-driven technologies, allied with our industry expertise, to transform client businesses into intelligent, high growth enterprises.

Shares of Coforge plunged approximately 6 per cent during early market hours to touch an intra-day low of Rs 5,025 per share on Monday, October 25, 2021.