26 Oct , 2021 By : Kanchan Joshi
NEW DELHI : Midcap IT services provider Coforge Ltd reported robust earnings in the September quarter. Both revenue growth and operating margins were ahead of the Street's expectations. On a sequential basis, its dollar revenue grew 7.4% to $212.8 million, beating consensus estimate of $209.7 millon. In constant currency terms, revenue increased by 3.9% sequentially.
Ebitda margins (pre-RSU) increased by 250 basis points (bps) sequentially to 18.6% higher than consensus estimate. One basis point is one hundredth of a percentage point. In a post earnings conference call, the company's management said, that margin growth was driven by multiple initiatives including higher offshore revenue, improved utilization, flattening of pyramid due to hiring at bottom of pyramid and operating leverage. Going ahead, the company's management expects margins to improve for the rest of the financial year as well. The management said that it is confident of delivering Ebitda margin of 19% in FY22, with an over 100bps sequential expansion in 3Q, followed by a further expansion in Q4FY22.
The management further highlighted that its organic order intake, excluding SLK Global, is at $285 million and executable order book over next 12 months is at $688 million. The management said that three large deal were signed in Q2FY22 with two $50 million plus deals. Coforge added 11 new customers during the quarter; six in the US and five in the EMEA region.
"Strong deal wins, a robust deal pipeline, and good consistency in large deal wins (two–three large deals every quarter) is encouraging. The recent rally in the stock indicates industry-leading growth and increasing margin, which have already been priced into current valuations," analysts at Motilal Oswal Financial Services Ltd said in a report.
As for the stock's performance, in the last one year, shares of the company have rallied around 127%, comfortably outperforming benchmark index Nifty IT index, which has risen 65% in the same span.
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