COFORGE - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 3.8

🧾 Core Financials

Earnings Growth: PAT surged 85.6% QoQ (₹111 Cr → ₹151 Cr), showing strong operational momentum.

EPS: ₹17.9 is modest relative to the current price, contributing to a high P/E.

Return Metrics: ROCE at 13.9% and ROE at 11.3% are decent but not industry-leading.

Debt Profile: Debt-to-equity of 0.10 — low leverage, indicating financial prudence.

Cash Flow: Not explicitly stated, but consistent profitability and low debt suggest stable operating cash flows.

💰 Valuation Indicators

Metric Value Insight

P/E Ratio 102 Extremely overvalued vs. industry PE (30.0)

P/B Ratio ~10.6 High premium over book value

PEG Ratio -14.0 Negative PEG suggests valuation disconnect

Dividend Yield 0.83% Modest, not a major income play

Valuation is stretched, and the negative PEG ratio flags caution despite strong earnings growth.

🧠 Business Model & Competitive Advantage

Coforge Ltd. is a mid-tier IT services firm with strengths in

Travel, BFSI, and healthcare verticals

Deep client relationships and high repeat business

Strategic acquisitions (e.g., Cigniti) to expand capabilities

Recent contract wins and margin expansion have fueled optimism. Analysts maintain bullish outlooks, with target prices ranging from ₹1,875 to ₹2,038

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📈 Technical & Sentiment Indicators

RSI: 63.1 – Approaching overbought territory.

MACD: 16.5 – Bullish momentum.

Volume Surge – Nearly 2x weekly average, indicating strong interest.

DMA 50 & 200: Current price is above both, confirming technical strength.

Support lies around ₹1,750–₹1,760, with resistance near ₹2,005

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💡 Investment Strategy

🔽 Entry Zone

Ideal Buy Range: ₹1,740–₹1,770, near support and DMA 50

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Current Price ₹1,826: Slightly above ideal entry, but still within accumulation zone.

🕰️ Long-Term Holding

Hold or Accumulate on Dips: Strong growth momentum and analyst confidence support long-term potential.

Watch Valuation & Execution Risks: Elevated P/E and negative PEG warrant caution. Monitor earnings consistency and margin trends.

If you'd like, I can help you compare Coforge with peers like L&T Technology Services or Mphasis to refine your strategy.

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www.gate.com

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stockanalysis.com

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in.investing.com

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