06 Jun , 2021 By : Kanchan Joshi
BENGALURU : The organic revenue growth of Coforge Ltd (formerly NIIT Technologies) is expected to accelerate further to 32.3% and 15.9% in FY22 and FY23, respectively.
The growth will be driven by “a strong exit rate, bounceback in transport vertical, a strong deal pipeline, and high next-12 months’ executable order book. We expect 10% of inorganic contribution from acquisition of SLK Global Solutions in FY22E," Edelweiss Securities said in its June 2021 IT services sector report.
The transport segment (including travel and hospitality) will be among the fastest to grow in the next couple of years. “We believe demand for travel will increase as unmasking, which has already started in some part of the world, including the US and Israel, will start to happen in other developed geographies," the report said.
The opening up of geographies will lead to increased investments to build digital capabilities to capture demand as people are likely to start travelling meaningfully in second half of 2021.
By geography, Americas and EMEA collectively contribute 86% to total revenue. “Covid-19 continues to remain a significant threat to recovery of global economies and any significant outbreak in a key geography—like the ones in India and Brazil—can slow deal momentum," the report said.
“We are initiating Coforge with ‘Buy’ and value the company at 12-month forward target price of ?5,005/share, based on 35x P/E multiple on Q2FY23E EPS, implying 41% potential upside," Edelweiss Securities said.
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