Coforge shares trade firm after promoter sells 6.3% stake

Shares of Coforge moved higher by 2 per cent to Rs 2,267, bouncing back 4 per cent from the intra-day low on the National Stock Exchange (NSE) on Tuesday after promoters of the company sold 6.3 per cent equity stake at Rs 2,310 per share on Monday via open market.

The stock of information technology (IT) consulting and software company was down 1.4 per cent to Rs 2,178 in the early morning trade. In the past week, it underperformed the market by falling 15 per cent, as compared to a marginal 0.1 per cent gain in the Nifty50 index till yesterday. It hit an all-time high of Rs 2,813 on October 13, 2020.

On October 26, 2020, Hulst B.V, the promoter of Coforge, offloaded 3.8 million equity shares, representing 6.3 per cent stake, for Rs 878 crore on the NSE, the bulk deal data shows. CLICK HERE FOR BULK DEAL DATA

Post transactions, Hulst B.V holding in Coforge reduced to 64 per cent from 70.28 per cent. The names of the buyers were not ascertained immediately.

However, despite the underperformance in the past week, the stock has rallied 102 per cent in the past six months, against 27 per cent surge in the S&P BSE Sensex.

For July-September quarter (Q2FY21), Coforge had registered healthy revenue growth, up 8.1 per cent quarter-on-quarter in constant currency terms. The company saw a 180 bps increase in margins in Q2FY21, mainly led by higher utilisation and cost rationalisation. Further, improvement in license revenues from its subsidiary, ramp up of large deals, higher utilisation and cost rationalisation bode well for margins in the coming quarters, analysts at ICICI Securities said in a report.

Coforge is expected to benefit from increased investment in Cloud, AI and data. Further, the company is winning healthy deals in the BFS & insurance sector. This coupled with wallet share gain in transport and improving growth trajectory in healthcare will lead to healthy growth in revenues in the coming years. This coupled with improving margins, prompt us to have a positive view on the stock from a long term perspective. However, the recent run up in stock price factors in most positives, the brokerage firm said.