COFORGE - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 3.4

💻 Fundamental Analysis: Coforge Ltd. (COFORGE)

Coforge is a mid-to-large cap IT services company with strong profitability and recent earnings momentum. However, its valuation metrics suggest caution for long-term investors seeking growth at a reasonable price.

Metric Value Implication

Market Cap ₹57,553 Cr Mid-to-large cap; stable but not dominant in IT sector

Stock P/E 59.6 Highly overvalued vs. industry PE of 29.1

PEG Ratio 7.32 Extremely high; valuation far exceeds growth expectations

ROE / ROCE 16.7% / 20.7% Solid profitability and capital efficiency

Dividend Yield 0.88% Moderate; adds some income stability

Debt-to-Equity 0.17 Low; manageable financial leverage

EPS ₹30.0 Decent earnings base

Qtr Profit Var +88.5% Exceptional recent growth; may be cyclical or one-off

FII/DII Holding Change -2.79% / +2.39% FII trimming aggressively; DII accumulating

📉 Technical Analysis

Current Price: ₹1,720

DMA 50 / DMA 200: ₹1,790 / ₹1,626 → Trading below 50 DMA; short-term weakness

RSI: 34.7 → Near oversold zone; potential for technical bounce

MACD: -27.5 → Bearish momentum

Volume: Below average; waning interest short-term

💰 Ideal Entry Price Zone

Given the valuation and technical setup

Ideal Entry Zone: ₹1,600–₹1,680

This range aligns with 200 DMA and offers better risk-reward

Avoid fresh entry above ₹1,800 unless valuation improves or growth sustains

🌱 Long-Term Investment Outlook

Why it’s a mixed candidate

Strong ROCE and ROE — operationally sound

Recent profit growth impressive — but sustainability uncertain

Low debt and moderate dividend yield — financial stability

DII accumulation — domestic confidence

Concerns

PEG > 7 — valuation far exceeds growth

P/E of 59.6 — premium pricing not justified by long-term metrics

FII trimming — possibly due to valuation or sector rotation

RSI and MACD suggest short-term weakness

🏁 Exit Strategy / Holding Period

If you already hold COFORGE

Holding Period: 1–3 years depending on earnings consistency

Exit Strategy

Consider trimming near ₹1,950–₹2,000 if valuation remains stretched

Hold only if ROCE stays above 18% and PEG drops below 2

Reassess if profit growth slows or IT sector faces margin pressure

Would you like a comparison with other IT stocks like LTIMindtree, Persistent Systems, or Tata Elxsi to evaluate better long-term tech picks?

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