Coforge misses Q2 earnings estimates, stock tanks over 10%


by 5paisa Research Team Last Updated: 2022-12-16T16:39:14+05:30

Mid-tier IT services firm Coforge (formerly NIIT Technologies) missed street estimates for quarterly earnings, disappointing investors who dumped its stock that tanked over 10% in the morning.

Coforge, which is majority owned by Baring Private Equity Asia, reported 21.6% year-on-year rise in consolidated net profit for the quarter ended September 30 to Rs 146.7 crore. On a sequential basis, net profit rose 18.7%.

Analysts had expected net profit upwards of Rs 160 crore.

Shares of Coforge fell as much as 11% in Monday morning trade to Rs 4,823.60 apiece, before paring the losses a tad.

EBITDA rose 34.6% year-on-year and 23.9% sequentially to Rs 292.3 crore during the quarter.

The company’s consolidated revenue for the quarter was up 36% over the year-ago period to Rs 1,569.4 crore. On a sequential basis, revenue rose 7.4%.

If one excludes the impact of acquisitions and divestitures, on an organic basis, revenue for the quarter was Rs 1,405.4 crore, up 21.8% over the previous year and 3.8% on a sequential basis. The firm had acquired a majority stake in SLK Global during the first quarter.

Coforge Q2: Other highlights

1) EBITDA margin rose to 17.4%, up from 14.4% in Q1 but lower than 17.8% in Q2 FY21.

2) Attrition has climbed to 15.3% during the quarter from 12.6% in the preceding quarter and 10.5% a year ago.

3) New client addition remained flat at 11 compared to preceding quarter and declined from 12 in the year-ago period.

4) Repeat business was 92% of the total as against 96% in the previous quarter and 89% in the same quarter last year.

Coforge management commentary

Sudhir Singh, Chief Executive Officer at Coforge, said the company’s investments in product engineering, cloud, data, automation and integration capabilities continue to power its path to being a $1 billion company next year.

“This is a landmark year for the firm as we anticipate that we shall grow revenues by at least 35% and our adjusted EBITDA by at least 40% over the previous year,” he said.

“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,” he added.

In view of sustained deal wins and incremental business from its customers, the company is now aiming for 22% growth (excluding SLK Global’s contribution) in constant currency terms during FY22. This is higher than the forecast of at least 19% growth indicated earlier.

This translates to at least 35% 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% for the year.


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