This midcap IT stock is entering a new growth phase – here’s why PL Capital sees 32% upside

Mumbai | 7 January

PL Capital has initiated coverage on Coforge with a target price of ₹2,140, implying 32% upside from the current price of ₹1,642. The brokerage believes the company has reached a key inflection point, supported by stronger deal quality, scalable client relationships and sustained organic growth.

Here’s a closer look at what’s driving PL Capital’s positive view on the stock.

Large deals improve visibility and earnings quality

Coforge’s $1.6 billion executable order book now offers 70–80% revenue visibility, with 10 large deals won in H1FY26, nearly matching FY25 levels. These multi-year, platform-led deals are improving conversion rates and supporting stable margins, with nearly 90% of revenues coming from repeat business.

Core verticals and client scaling drive growth

PL Capital highlighted that BFSI and TTH (Travel, Transportation and Hospitality Segment) remain the main growth engines, delivering organic CAGRs of around 25% and 13%, respectively.

The report has also pointed to a sharp improvement in client pyramid quality, with $1 million+ clients rising from 80 to 243, and a growing focus on the $5–10 million revenue bucket, which will help the company steadily increase business from existing clients

AI platforms strengthen differentiation

PL Capital noted that Coforge’s AI-led platforms- Quasar and Forge-X are becoming key differentiators, with 200+ AI and GenAI use cases embedded across delivery. This AI-first engineering approach is helping Coforge move up the value chain into higher-margin transformation work, supporting both deal wins and margin resilience.

Encora deal adds scale and geographic depth

PL Capital highlighted the Encora acquisition as a strategic growth lever, with integration expected by 2QFY27.

Encora is projected to deliver 11% YoY growth with ~20.5% margins, add 11 clients in the $10 million+ bucket, and strengthen Coforge’s presence in the US and LATAM, improving both scale and delivery flexibility.

Leadership depth supports execution

PL Capital also flagged Coforge’s investment in execution, noting the onboarding of 20+ senior leaders since 2022 and the use of performance-linked ESOPs to align leadership incentives with long-term value creation—key for scaling large, complex deals.

Why PL Capital is bullish

PL Capital believes Coforge’s 14.7% organic CAGR over FY20–25, strong peer outperformance, rising share of large deals, AI-led differentiation and disciplined acquisitions together support mid-teens growth visibility, making current valuations attractive despite a volatile IT spending environment.

Key takeaways

• PL Capital sees up to 32% upside as Coforge’s large, multi-year deal wins lift revenue visibility.
• A $1.6 billion executable order book provides 70–80% revenue visibility, supporting earnings stability.
• Core verticals (BFSI and TTH) continue to drive growth, supported by steady expansion of business from existing clients.
• AI-led platforms and the Encora acquisition add scale, US exposure and strengthen long-term growth prospects.

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