Shares of Coforge surged 11.50% to hit the upper circuit on Wednesday following the announcement of its Q3FY25 results, which exceeded market expectations. The company reported an 8.4% sequential growth in constant currency (cc) terms. In U.S. Dollar terms, Coforge’s revenue rose by 7.5% quarter-on-quarter to $397 million. Meanwhile, in rupee terms, revenue for the quarter grew by 8.4% sequentially to Rs. 3,318.2 crore.

Earnings Before Interest and Tax (EBIT) increased to Rs. 316.2 crore from Rs. 287.6 crore in the previous quarter, with the EBIT margin marginally improving to 9.5% from 9.4%. Net profit also saw an increase of 6.6% quarter-on-quarter, rising to Rs. 215.5 crore.

This marked the second consecutive quarter where Coforge’s order intake exceeded $500 million, underscoring robust demand and strong deal wins.

Commenting on the results, Sudhir Singh, CEO and Executive Director, Coforge Ltd, said, “An 8.4% sequential cc growth and a 40.3% YoY cc growth in a traditionally weak quarter, coupled with four large deals and a 122 bps sequential expansion in margins, highlight our strength. With a robust pipeline of large deals and an order book 40% higher YoY, we are confident of delivering sustained and robust growth in the coming year.”

Coforge Limited, a prominent player in India’s IT services sector, is trading within the range of Rs. 8,652.10 to Rs. 9,320.00, showcasing strong momentum. With a market capitalization of Rs. 61,350 crore and a Price-to-Earnings (P/E) ratio of 73.31, the stock reflects its premium valuation. Although it remains below its 52-week high of Rs. 10,026.80, Coforge has delivered a remarkable recovery from its 52-week low of Rs. 4,287.25. This article delves into Coforge’s financial performance, technical analysis, and its competitive positioning, offering actionable insights for investors.

Stock Performance: Key Metrics

Coforge’s elevated P/E ratio underscores its growth potential, while its consistent dividend yield appeals to income-focused investors.

Technical Analysis: Candlestick Patterns

On the daily chart, Coforge Limited has formed a Bullish Marubozu Pattern, characterized by a long green candle with little to no wicks. This pattern typically indicates strong buying interest, signaling bullish momentum.

If the stock sustains above Rs. 9,320.00, it may confirm further upside, potentially targeting its 52-week high. However, failure to sustain could lead to a retracement toward key support levels.

Fibonacci Retracement Levels

Using the 52-week high (Rs. 10,026.80) and low (Rs. 4,287.25), the Fibonacci retracement levels for Coforge are calculated as follows:

Key Insight:
Coforge is trading above the 61.8% retracement level (Rs. 7,676.41), signaling strong bullish sentiment. A move above Rs. 9,320.00 could push the stock closer to its 52-week high of Rs. 10,026.80.

Support and Resistance Levels

Support: Rs. 8,652.10
Resistance: Rs. 9,320.00
Trading Strategy:

A breakout above Rs. 9,320.00 could drive the stock toward Rs. 9,800 and beyond.
A decline below Rs. 8,652.10 might lead to a correction toward the Rs. 7,676.41 Fibonacci level.

Analyst Recommendations

ICICI Direct, in a January 2025 report, rated Coforge as a “Buy” with a target price of Rs. 10,200, citing strong deal wins and consistent growth in digital services.
Motilal Oswal, in its December 2024 note, recommended a “Hold” with a target of Rs. 9,500, highlighting valuation concerns but appreciating the company’s robust pipeline.

Actionable Insights and Investment Strategy

Short-Term Traders:

Look for a breakout above Rs. 9,320.00 to confirm bullish momentum.
Use Rs. 8,652.10 as a stop-loss to manage downside risk.
Long-Term Investors:

Coforge’s leadership in niche IT verticals and consistent deal wins make it an attractive long-term investment. Accumulate on dips, targeting Rs. 10,200 over the next 12 months.
Risk Factors:

Rising competition in the IT sector could pressure margins.
The elevated P/E ratio leaves little room for earnings disappointment.