Coforge Stock May Rally 96% on Centrum AI Strong Buy Call
Coforge has emerged as a top midcap IT pick after Centrum Broking projected a potential upside of nearly 96%. The brokerage highlighted strong revenue growth, a robust deal pipeline, improving margins, and AI-driven transformation as key growth drivers. With strategic investments and a diversified business mix, Coforge is well-positioned for long-term expansion, though geopolitical and technology risks remain.
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Coforge Poised for Major Upside? Centrum Reaffirms Strong Buy View
Coforge has come into sharp focus after brokerage firm Centrum Broking reiterated a Strong Buy rating, projecting nearly 100% upside from current levels.
In its market note dated February 25, Centrum assigned a target price of ₹2,405, compared to Coforge’s recent closing price of around ₹1,221 and its suggested buy level of ₹1,248. This implies a potential gain of nearly 96% in the medium term.
Key Reasons Behind Centrum’s Bullish Outlook
1. Strong Revenue Growth
Centrum highlighted Coforge’s consistent performance, noting a 5.1% sequential revenue growth in the third quarter. This expansion was driven mainly by:
* Healthcare
* Hi-tech
* Travel
* Insurance
The company has also reduced its dependence on the BFS (Banking & Financial Services) segment, resulting in a more balanced revenue mix.
2. Robust Order Book and Deal Pipeline
Coforge continues to show strength in deal wins:
* Total Contract Value (TCV): $593 million
* 12-month executable order book: $1.72 billion
* Repeat business: 94%
Large deal ramp-ups and long-term client relationships are supporting future growth visibility.
- 3. Improving Profitability
The brokerage pointed out structural improvements in margins due to:
* Better operating leverage
* Lower employee attrition
* Delivery optimisation
* AI-driven productivity gains
Management has guided for an EBIT margin of 14% in FY26, reflecting confidence in sustained profitability.
4. Strategic Push Into AI
Coforge is strengthening its digital and AI capabilities through major investments. A key move was the acquisition of Encora for $2.35 billion, aimed at accelerating its AI-led transformation and platform capabilities.
Growth Outlook
Centrum expects Coforge’s growth momentum to continue into FY27, especially across:
* BFSI
* Travel
* Digital services
With strong fundamentals and a healthy deal pipeline, the brokerage remains optimistic about long-term performance.
Risks to Watch
Despite the positive outlook, Centrum also flagged certain risks:
* Geopolitical uncertainty affecting global IT spending
* AI-led disruptions impacting traditional IT services
* Increased competition and pricing pressure
These factors could lead to volatility and impact earnings in the future.
Overall Verdict
Centrum maintains a bullish stance on Coforge, supported by:
- Strong revenue growth
- Large and diversified order book
- Margin improvement
- AI-focused strategy
