Coforge jumps 7% after Q3FY23 results beats Street estimate

The firm upgraded its fiscal year 2023 annual revenue growth guidance to 22 per cent in constant currency terms and reaffirmed adjusted EBITDA annual margin guidance

Shares of Coforge rallied 7 per cent to Rs 4,250 in Friday’s trade, in an otherwise subdued market, after the information technology (IT) services provider reported better-than-expected 24 per cent year-on-year (YoY) jump in consolidated profit after tax (PAT) to Rs 228 crore in the December quarter (Q3FY23).

On a consolidated basis, Q3FY23 revenues were up 3.7 per cent quarter-on-quarter (QoQ), whereas 20.7 per cent YoY on a constant currency (CC) basis. In rupee terms, meanwhile, revenue was up 4.9 per cent, while 2 per cent QoQ in dollar terms.

Adjusted earnings before interest, taxes, depreciation, and amortization (ebitda) margin, on the other hand, stood 18.5 per cent in Q3FY23, up from 18.4 per cent in Q2FY23.

The firm upgraded its fiscal year 2023 annual revenue growth guidance to 22 per cent in CC terms and reaffirmed adjusted EBITDA annual margin guidance.

Analysts expected revenue growth for the quarter to be moderate due to higher furloughs and lesser working days in the quarter. 

ICICI Securities expected the company to report 3.5 per cent QoQ CC revenue growth for the quarter & dollar revenue growth to be at 3.2 per cent QoQ factoring 30bps cross currency headwinds.

"Rupee revenue is likely to grow 6.9 per cent QoQ for the quarter to be aided by rupee depreciation, the brokerage firm had said, while expected EBITDA margins to improve 40 bps QoQ due to operating efficiencies and rupee depreciation," the brokerage firm had said.

Meanwhile, the management said the firm has signed largest number of deals during the quarter in its history. As a consequence, the order intake at $345 million has been the highest ever. This performance in a seasonally weak quarter, thereby, has set up positive tone for FY2024.

"The company’s order book executable over next 12 months stood at $841 million at the end of the quarter, 20 per cent YoY growth. Attrition declined by 60 bps QoQ and stood at 15.8 per cent and continues to be amongst the lowest in the industry," the management added.