COFORGE - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.6
| Stock Code | COFORGE | Market Cap | 51,382 Cr. | Current Price | 1,196 ₹ | High / Low | 1,994 ₹ |
| Stock P/E | 70.7 | Book Value | 179 ₹ | Dividend Yield | 1.27 % | ROCE | 13.9 % |
| ROE | 11.3 % | Face Value | 2.00 ₹ | DMA 50 | 1,272 ₹ | DMA 200 | 1,506 ₹ |
| Chg in FII Hold | -11.2 % | Chg in DII Hold | -9.25 % | PAT Qtr | 133 Cr. | PAT Prev Qtr | 332 Cr. |
| RSI | 45.8 | MACD | -4.66 | Volume | 14,64,606 | Avg Vol 1Wk | 14,71,474 |
| Low price | 1,008 ₹ | High price | 1,994 ₹ | PEG Ratio | -9.63 | Debt to equity | 0.08 |
| 52w Index | 19.0 % | Qtr Profit Var | 25.5 % | EPS | 20.3 ₹ | Industry PE | 21.6 |
📊 Financials: COFORGE shows moderate fundamentals with ROE at 11.3% and ROCE at 13.9%, reflecting limited efficiency. EPS of ₹20.3 provides earnings visibility, but quarterly PAT declined sharply from ₹332 Cr. to ₹133 Cr. (-25.5%), showing weak profitability momentum. Debt-to-equity at 0.08 highlights low leverage, supporting balance sheet stability.
💹 Valuation: The stock trades at a steep P/E of 70.7, far above the industry average of 21.6, indicating significant overvaluation. Book value of ₹179 results in a high P/B of ~6.7. PEG ratio of -9.63 highlights poor valuation alignment with growth prospects. Intrinsic value appears lower than current price, limiting margin of safety.
🏢 Business Model: COFORGE operates in IT services, benefiting from global demand for digital transformation. Its competitive advantage lies in diversified service offerings and low debt. However, declining profits and reduced institutional confidence (FII -11.2%, DII -9.25%) weaken sentiment and long-term attractiveness.
🎯 Entry Zone: Safer entry between ₹1,050–1,150, closer to support levels and below DMA averages. Long-term investors may hold for 2–3 years, with exit considerations if ROE falls below 10% or profitability continues to decline.
Positive
- Low debt-to-equity ratio (0.08) ensures financial stability.
- EPS of ₹20.3 supports earnings visibility.
- ROCE (13.9%) and ROE (11.3%) show moderate profitability.
Limitation
- Extremely high P/E (70.7) vs industry average (21.6).
- Negative PEG ratio (-9.63) highlights poor valuation alignment with growth.
- Quarterly PAT declined sharply (-25.5%).
- Institutional holdings decreased significantly (FII -11.2%, DII -9.25%).
Company Negative News
- Sharp decline in quarterly profits and reduced institutional confidence.
Company Positive News
- Low debt levels provide financial stability.
- Moderate profitability metrics offer some resilience despite valuation concerns.
Industry
- IT services sector remains competitive with global demand.
- Industry PE at 21.6 suggests COFORGE trades at a steep premium relative to peers.
Conclusion
⚠️ COFORGE is a moderately profitable company but currently overvalued with weak institutional support. Entry near ₹1,050–1,150 offers safety for speculative investors, while holding for 2–3 years could yield moderate returns if profitability improves and valuations normalize.