BTTV Exclusive | Coforge CEO sees robust FY27 growth; Encora integration to drive margins

“We think Q1 was an exceptional quarter for us because excluding the business that we divested, we’ve grown 5.2 per cent in CC terms sequentially. We expect the rest of the year to also reflect very robust growth, starting with Q2 itself,” Singh said.

Coforge reported a 49 per cent year-on-year increase in consolidated revenue to Rs 5,527.7 crore in Q1FY27, while revenue rose 33 per cent in US dollar terms. EBITDA jumped 74 per cent YoY to Rs 1,123.3 crore, with the margin expanding to 20.3 per cent from 17.5 per cent a year earlier. EBIT margin stood at 16 per cent, ahead of the company’s full-year guidance of 15.5 per cent.

Net profit increased 110 per cent YoY to Rs 518.6 crore. The company also reported a record next-12-month signed order book of $2.23 billion, up 27 per cent sequentially and 44 per cent YoY. Order intake stood at $691 million during the quarter.

Coforge margin buffer provides room for growth
Singh said the company’s stronger-than-expected margin performance provides sufficient headroom to prioritise revenue growth through the rest of the financial year.

“Quarter one has come in at 16 per cent EBIT when the guidance for the year was 15.5 per cent. We would have expected to come in at around 15 per cent in quarter one. It gives us also enough of a margin buffer to keep on pushing the pedal on revenue as well going forward,” he said.

The company had guided for an EBIT margin of 15.5 per cent for FY27. The Q1 performance came ahead of that guidance, helped by operational efficiencies and the integration of Encora. Coforge’s EBITDA margin also rose sharply to 20.3 per cent during the quarter.

Encora integration ahead of schedule
Singh said the integration of Encora, acquired by Coforge earlier this year, is progressing in line with the company’s integration playbook. He said Coforge had already extracted around 40 per cent of Encora’s general and administrative (G&A) costs.

“The key factor there has been the fact that the acquisition of Encora was consummated using the Coforge playbook, and we’ve always said that the Coforge integration playbook is uniquely our own,” Singh said.

“We take complete and immediate control on day one. We have already extracted out 40 per cent of the G&A cost of Encora.”

According to Singh, the early cost savings leave scope for further efficiencies in the coming quarters. More importantly, the company believes Encora will increasingly mirror Coforge’s growth profile.

Encora to become EPS accretive in FY27
Singh reiterated that the Encora acquisition will not dilute earnings per share (EPS) and is expected to become EPS accretive in FY27 itself.

“Encora is going to start mirroring the Coforge growth next year. The margins of Encora, even though one full quarter isn’t over, are already on par with Coforge,” he said.

He added that Encora’s revenue growth should start aligning with Coforge’s growth from Q3FY27.

Singh also pointed to the impact of the acquisition on the company’s shareholder base and earnings. “Our shareholder base has expanded 25 per cent, and yet our EPS is Rs 13.30 compared to Rs 13.80 last year. That’s also after paying interest on the $550 million loan that we had assumed,” he said.

The Coforge CEO reiterated that the acquisition would be EPS accretive in FY27 despite the financing cost associated with the transaction.

$2.23 billion order book provides visibility
Coforge’s order pipeline remains a key driver of management’s confidence. The company secured $691 million in order intake during Q1FY27, taking its next-12-month signed order book to a record $2.23 billion.

Singh said the strong order book, combined with deal wins already being secured in Q2, provides “very significant comfort” around the company’s outlook for robust growth.

“Four weeks of quarter two are behind us. They give us very significant comfort that the commentary that we provided around very robust growth continuing will continue,” he said.

Coforge expects record large-deal wins in Q2
Singh also highlighted the company’s large-deal pipeline, saying Coforge expects the current quarter to potentially see the highest number of large deals closed in its history.

“We said that the quarter that has started, which is quarter two right now, is likely to be the quarter in which we will close the highest number of large deals in the history of the firm,” he said.

The deals are expected to be driven largely by North America and Europe, strengthening Coforge’s revenue visibility for the remainder of FY27.

With robust organic growth, a record order book, improving margins and the early benefits of Encora integration, Coforge is positioning FY27 as another year of strong performance. The company itself said its Q1 performance, combined with the $2.23 billion order book and a strong large-deal pipeline, has set it up for robust growth through the year.