Coforge raised its FY27 consolidated EBIT margin guidance to 16% from 15.5% and said it expects a reported EBIT margin of 17% in the fourth quarter, citing AI-led efficiencies across delivery and internal functions.
Chief Executive Sudhir Singh said the company aims to be among the top three tech services firms by EBIT margin in the short to medium term.
AI Efficiencies Drive Margin Upgrade
In the September quarter, consolidated EBIT margin was 16%, while the standalone business delivered 17%. Revenue was $652.2 million (Rs 6,170.8 crore), up 10.9% sequentially in constant currency and 10.1% in dollar terms.
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Organic growth was 3.8% in constant currency. Chief Financial Officer Saurabh Goel said Encora, acquired this year, was largely flat sequentially, and that it would mirror Coforge’s growth from the third quarter.
Goel said AI-led efficiencies in fixed-price contracts will show up in Q4 margins. Utilisation, at 82.4%, leaves headroom, with most peers at 86% or more, he added. Combined G&A fell to 6.3% of revenue from 6.6% in the previous quarter.
Year-on-year, revenue grew 53% and sales and marketing costs 52%, while G&A rose only 15.6%. Goel said no one was let go, and that technology allowed growth without extra hiring.
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Singh said that if Coforge exits the year at 17%, the least it should deliver next year is 17%. On the call, Goel said hedge losses of $10.2 million in the quarter should ease, with mark-to-market losses of $7.1 million expected in Q3 and $1.2 million in Q4.
Exceptional items of $5.9 million should be zero next quarter, and Q4 earnings per share could touch Rs 19-20, he said. EPS was Rs 13.3 this quarter, against Rs 12.3 in the last.
Record Deal Wins Back Growth Outlook
Order intake exceeded $1 billion, up 51% sequentially and 102% year-on-year. Coforge signed eight large deals, its highest for any quarter, including a $230 million UK public sector contract. Singh said it hopes to sign at least eight more in Q3. The next-12-month executable order book rose to $2.4 billion from $1.64 billion a year ago.
A second client has crossed a $100 million annualised run rate. Singh said most large deals are sole-sourced, built on proactive solutions rather than price competition.
Coforge is running more than 520 AI engagements for over 225 clients, said President John Speight.
Free cash flow was $53.8 million, or 89% of profit after tax, and 92% for the first half. Coforge guides for 100% for FY27. Headcount rose by 1,137 to 47,365, with attrition at 10.4%.
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