Mid-tier IT firm Coforge with beyond-market expectation revenue growth and sizeable margin expansion has retained its guidance even as the broader industry has narrowed its outlook. The company’s consistent growth is the result of gaining market share from its competitors in the market, said Chief Executive Officer, Sudhir Singh.
In Q2, Coforge’s revenue stood at ₹2,276 core, up 2.5 per cent sequentially and 16.2 per cent on a YoY basis. Profit saw a 9.5 per cent QoQ growth at ₹181 crore and a 10 per cent decline on YoY basis. Margins expanded 160 bps to 17.6 per cent and guidance was retained at 13-16 per cent.
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Mega deals
The CEO credits the performance to the company’s ability to ensure deal signings see revenue conversion through intense execution, amidst larger peers facing challenges with the materialisation of the deal pipeline. Coforge also managed to retain its existing book of business. Its executable order book over the next twelve months stands at $935 million, a 16.6 per cent YoY growth. With an order intake of $313 million, it signed three large deals in the quarter.
“The market is tough, but we have figured out an adaptable and resilient approach to chart growth. Even in this market, opportunities exist in the broad spectrum of productisation happening in the tech services space and certain areas such as governance risk and compliance, and payments in banking,” Singh told businessline.
Coforge is also confident of further expanding its margins by 100 bps more by next quarter and eventually exiting the year in the range of 18.3-18.7. In terms of the employee base, it added 414 more in Q2 totaling 24638. Singh said that the hiring will continue and campus recruitment will also take place.
Diversified clientele
The company’s bet on Artificial Intelligence is also gaining ground, given its history of work in the space it has completed 100 projects across 75 clients and currently has about 100 projects going on. It has also worked on co-innovation-based projects with some of its customers in the transportation, airline, and insurance verticals
Given its long-term goal of achieving a $2 billion annual revenue rate and gradually reaching $5 billion, the company is also on the active lookout for inorganic opportunities to aid the ambition. Singh said, “We will be looking at acquisitions to add more areas such as system integrators (SI) partners in hyper scaler space, or partners with niche knowledge in ServiceNow and Salesforce. From a domain perspective, assets focused on the healthcare vertical would be of our interest.”