Coforge - A Decade of Execution, Now Entering Its Most Profitable Phase ๐ฅ
Nine years ago, Coforge was a $400 million company. Today, it is nearly 7x larger, having delivered a remarkable track record of 22% EPS CAGR, 24% PAT CAGR and 19% FCF CAGR over the period.
FY26 was another year where the company proved that execution remains its biggest differentiator.
๐ถ๏ธ FY26: Growth Was Broad-Based and High Quality
โข Despite a challenging macro environment, Coforge delivered 29.2% USD revenue growth, powered by strong wallet-share gains and large deal wins
โข Growth wasn't dependent on a single vertical:
>> Healthcare & High-Tech: 98%
>> Travel: 62%
>> BFS: 12%
>> Government (ex-India): 17.5%
>> Retail & Manufacturing: 27%
โข The company signed 21 large deals during the year, while its top 10 clients grew 40.4%, highlighting strong mining and cross-sell execution
๐ถ๏ธ The Bigger Story: Margins Have Been Structurally Reset
โข While revenue growth grabbed headlines, the real work happened behind the scenes
โข Over FY26, Coforge quietly automated internal operations, AI-enabled workflows, optimized delivery structures and right-sized G&A
โข Management believes these changes have permanently altered the firm's profitability profile
โข As a result:
>> EBITDA margin expanded from 14.3% to 18.6%
>> EBIT margin expanded from 10.7% to 14.4%
>> Q4 EBIT margin reached a record 16.6%
โข Management's message was clear: Coforge has historically been a growth leader; from FY27 onward, it aims to be a margin leader as well ๐ฅ
๐ถ๏ธ Cash Flows Finally Catching Up
FY26 also marked a breakthrough year in cash generation.
โข FCF grew 68% YoY to $135 million
โข Q4 delivered a record $73.7 million FCF
โข Net cash improved to $117 million
โข Management upgraded long-term FCF/PAT expectations from 70-80% to 100%
This reflects tighter collections, better contract structures and stronger operating discipline.
๐ถ๏ธ AI Is Not a Threat - It's the Next Growth Engine
โข Coforge's management strongly pushed back against the narrative that AI will reduce IT services demand
โข Their view: writing code may become cheaper, but operating, governing, securing and maintaining AI systems creates entirely new revenue pools
โข The company has already built significant AI capabilities:
>> 150 AI engagements delivered
>> 30,000 AI-trained employees
>> 11,000 Data & AI practitioners
>> 600 advanced AI specialists
>> Proprietary OneAI platform ๐ฅ
โข AI is already improving delivery productivity by 25โ35%, code generation by 40โ60%, and modernization timelines by up to 10x
๐ถ๏ธ FY27: Management Sounds Extremely Confident
โข The company enters FY27 with:
>> Record $1.75 billion executable order book
>> Additional framework agreements not reflected in the order book
>> Strong momentum across Travel, Healthcare, BFS, Insurance and UK Public Sector
>> Encora integration largely completed
โข Guidance:
>> EBITDA Margin: 20.5โ21%
>> Standalone EBIT Margin: 16.5โ17%
>> Consolidated EBIT Margin: 15.5%
>> FCF/PAT: 100%
โข Management repeatedly described FY27 as an "exceptional year" and believes the current growth story is "not even half done." ๐ฅ
Src -
@concall_in
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@vishan_29 for more updates.
๐ด Disclaimer: No recommendation. For educational purposes only.