Coforge stock jumps 8% on higher FY22 revenue growth guidance

One highlight was that the company’s management raised its organic constant currency revenue growth guidance for fiscal 2012 from 22% to 24%. This was backed by strong deals and a strong deal pipeline so far this fiscal. In Q3 FY22, its revenue grew 5.2% sequentially in constant currency terms.

In a post earnings conference call with analysts, the company’s management said it signed major deals with two deals worth over $10 million in Q3FY22. On a year-over-year basis, Coforge’s order intake was $247 million, with the executable order book growing approximately 29% over the next 12 months to $701 million, excluding SLK, management said. Investors believe that Coforge bought 60% stake in SLK Global Solutions Pvt in April 2021. Ltd.

According to the company, the SLK integration has progressed well and with the appointment of senior management, there will be more scope for cross-selling.

Further, although the company’s attrition increased from 15.3% in Q2FY22 to 16.3% in Q3FY22, it is the lowest in the industry, the company said in a press release.

Meanwhile, Coforge’s adjusted EBITDA margin for the quarter rose 90 basis points sequentially to 19.5%. Ebitda is short for earnings before interest tax depreciation and amortization. One basis point is one hundredth of a percentile. Despite the pay hike, margins during the quarter were aided by strong growth in clients and improved offshore mix, management said. Management has guided for FY12 adjusted EBITDA growth of 44% year over year.

Analysts at Prabhudas Lilladher say this means 4Q2FY22 adjusted EBITDA margin will be 20.8% as compared to 19.5% in 3Q22. “We believe there is room for further improvement in margins in FY23 as well, aided by levers of improvement in offshore mix, revenue growth leverage and pyramid optimization,” said Prabhudas Lilladher’s report.