Coforge gains 6% as analysts turn bullish after Q2, see up to 36% upside

On the bourses, Coforge share price zoomed up to 5.98 per cent to hit an intraday high of ₹1,866 per share post Q2 results.

Information technology (IT) company Coforge reported a robust set of results for the second quarter of fiscal 2026 (Q2FY26), with revenue growth, margin expansion, and positive cash flows driving renewed optimism among analysts. 

 

The company posted revenue of $462 million, reflecting a 5.9 per cent quarter-on-quarter (Q-o-Q) increase in constant currency terms, broadly in line with estimates.

 

The company’s earnings before interest and taxes (Ebit) margin rose sharply by 250-260 basis points Q-o-Q to 14 per cent, exceeding some analyst expectations. Adjusted profit after tax (PAT) stood at ₹370 crore, reflecting a 86 per cent rise year-on-year (Y-o-Y) and an 18 per cent increase quarter-on-quarter (Q-o-Q), highlighting the company’s operational efficiency and resilience across key verticals. 

Meanwhile, on the bourses, Coforge share price zoomed up to 5.98 per cent to hit an intraday high of ₹1,866 per share. At 9:20 AM, Coforge share price was trading 5.45 per cent higher at ₹1,856.55. In comparison, BSE Sensex was trading 0.24 per cent higher at 84,414.69 levels.

 

Japan-based brokerage Nomura highlighted that Coforge’s improvements in Ebit margin and free cash flow should allay previous market concerns.   ALSO READ | Tata Power retains 'Buy' tag from Motilal Oswal; here are the key tailwinds 

“A strong and executable order book provides comfort on near- to medium-term revenue outlook,” the brokerage said, noting that deal wins during the quarter reached $514 million, including five large deals. 

 

Nomura expects the company to post approximately 29 per cent Y-o-Y revenue growth for FY26 in US dollar terms, with sustainable Ebit margins around 14 per cent. The brokerage maintained its ‘Buy’ rating with a target price of ₹1,900.

 

Motilal Oswal echoed this optimism, stressing upon the resilience of client spending across verticals. The brokerage noted that Coforge’s 12-month executable order book remained solid at $1.6 billion, up 25-27 per cent Y-o-Y, boosting confidence in the company’s organic growth prospects. 

 

“Revenue, Ebit, and adjusted PAT are expected to grow 32 per cent, 48 per cent, and 59 per cent Y-o-Y respectively in the second half of FY26,” Motilal Oswal said, valuing the stock at 38 times June 2027 projected EPS, with a target price of ₹2,400. The brokerage maintained its ‘Buy’ rating.

 

The improvement in free cash flow was a key highlight, analysts noted. Coforge generated $36.5 million in free cash flow during the quarter, representing 84 per cent of PAT and turning positive from a negative $22 million in Q1FY26. 

 

Analysts attributed this to operational efficiency and better management of working capital. Salary increments scheduled for Q3 are expected to be offset partly by lower ESOP and depreciation costs, helping the company sustain its Ebit margins.

 

Choice Institutional Equities highlighted the company’s strong positioning through technology and innovation. The brokerage noted that Coforge is embedding artificial intelligence (AI) and leveraging proprietary platforms such as Code Insight AI, BlueSwan, and Forgex to drive intelligent automation-led delivery. These initiatives, coupled with large-deal momentum, underpin management’s confidence in sustaining robust growth.   ALSO READ | Brokerages divided on Aditya Birla Sun Life AMC post Q2; Buy or sell? 

Analysts at Choice Institutional now project revenue, Ebit, and PAT to grow at a compound annual growth rate (CAGR) of 21.7 per cent, 26.4 per cent, and 38.6 per cent respectively over FY25-28. The brokerage reaffirmed its ‘Buy’ rating with a revised target price of ₹2,015.

 

Nuvama also highlighted that the company’s solid performance had addressed market concerns regarding margins and cash flow, paving the way for a potential re-rating. The brokerage upgraded its FY26 and FY27 EPS estimates by 2.6 per cent and 4.6 per cent, respectively, and rolled over its valuation to 38 times FY27-28E average EPS. Nuvama retained its ‘Buy’ rating with a target price of ₹2,250 (earlier ₹2,000).

 

Coforge’s growth in Q2FY26 was led by the Travel & Transportation and Banking verticals, which recorded 6.4 per cent and 4.2 per cent Q-o-Q growth in US dollar terms, respectively. The company’s management highlighted that despite seasonal furloughs in Q3, the timely ramp-up of newly won projects and a strong pipeline would likely drive growth in the second half of FY26 (H2FY26).

 

That said, analysts agree that Coforge is well-positioned among mid-cap IT companies. Its strong order book, positive cash flow, and rising margins provide a solid foundation for growth. The company’s focus on technology and large deal wins are seen as key drivers that could continue supporting earnings in the coming quarters.