Coforge Q1 FY27 Results: Revenue Jumps 49% on Encora Acquisition, Record Order Book Fuels Stock Rally

28 Jul 2026 , 10:41 AM

Coforge Shares Surge Over 9% After Strong Q1 FY27 Results

Coforge Ltd. shares rallied sharply on the back of its Q1 FY27 earnings, with the stock gaining more than 9% during the trading session. After closing at Rs 1,528.40 in the previous session, the stock opened at Rs 1,570, touched an intraday high of Rs 1,680, and was trading at Rs 1,666.80, up 9.06%.

The rally followed the company’s robust quarterly earnings, record order wins, and strong margin performance. However, a closer look at the numbers suggests that much of the revenue growth was driven by the acquisition of Encora rather than pure organic expansion.

Coforge Reports 49.2% Revenue Growth in Q1 FY27

Coforge reported Q1 FY27 revenue of Rs 5,527.7 crore, representing a 49.2% year-on-year increase. In U.S. dollar terms, revenue grew 33.3% YoY and 21.1% sequentially.

The standout contributor was the consolidation of Encora, acquired effective May 1, 2026. Encora contributed USD 100.7 million to the company’s total quarterly revenue of USD 592.2 million, accounting for nearly 17% of the combined business.

While reported constant-currency revenue increased 22.3% quarter-on-quarter, the company’s organic constant-currency growth was only 1.1%, underscoring that the headline revenue growth was largely acquisition-led.

Organic Growth Improves After Planned Business Exits

Coforge stated that organic constant-currency growth rises to 5.2% sequentially after excluding two planned portfolio exits:

• Exit from a USD 15 million low-margin India government business.
• USD 4 million revenue impact from the sale of a data center asset.

Interestingly, the company’s total sequential revenue increase was USD 103.1 million, while Encora alone contributed USD 100.7 million, indicating that nearly the entire sequential growth came from the acquisition.

Among existing business verticals, performance remained healthy:

• Healthcare & Hi-tech grew 11.6% organically.
• Insurance increased 4.6%.
• Banking & Financial Services rose 2.9%.
• Travel, Transportation & Hospitality expanded 1.7%.

EMEA Drives Geographic Growth

From a regional perspective:

• Europe, Middle East & Africa (EMEA) delivered 8.4% organic growth.
• Americas posted 3.5% growth.
• Other geographies declined due to planned business exits.

The regional diversification continues to support Coforge’s long-term growth strategy.

Margins Stay Strong Despite Encora Integration

One of the biggest positives from the quarter was Coforge’s ability to maintain profitability despite integrating a large acquisition.

Key profitability highlights include:

• EBITDA increased 73.6% YoY to Rs 1,123.3 crore.
• EBITDA margin improved to 20.3%, expanding 285 basis points year-on-year.
• EBIT surged 101.4% YoY to Rs 882.2 crore.
• EBIT margin stood at 16%, comfortably above the company’s FY27 guidance of 15.5%.

The company’s standalone organic EBIT margin was even stronger at 16.7%, suggesting only limited margin dilution from Encora.

Management also attributed margin expansion to greater adoption of artificial intelligence across client delivery and internal operations.

Net Profit More Than Doubles, But Sequential Decline Continues

Profit after tax from continuing operations rose 109.8% YoY to Rs 518.6 crore.

However, after adjusting for discontinued operations in the base quarter, the actual year-on-year growth comes to 63.4%, providing a more comparable picture.

Sequentially, PAT declined 15.3% due to:

• Higher tax expenses.
• Increased interest costs following acquisition financing.

Net interest expenses climbed sharply from Rs 17.9 crore in Q4 FY26 to Rs 59.8 crore during the quarter.

Record Order Book Strengthens FY27 Revenue Visibility

Coforge continued its strong deal momentum.

Key order metrics include:

• Fresh order intake reached USD 691 million, up 36.3% YoY.
• Executable 12-month order book expanded to USD 2.23 billion, up 44.2% YoY.
• Four large deals were signed across North America, Europe, and Latin America.

The robust order pipeline significantly improves revenue visibility for the remainder of FY27.

Client Diversification Continues to Improve

The Encora acquisition has also broadened Coforge’s customer base.

Key client metrics include:

• Top five clients now contribute 18% of revenue compared to 21.8% previously.
• Top ten clients contribute 26.1%, down from 31.4%.
• Repeat business remains exceptionally strong at 95.7%.
• Million-dollar clients increased from 245 to 379, largely due to Encora.

Lower client concentration reduces dependency on a handful of large customers.

AI-Led Services Become Core Growth Driver

Artificial intelligence has become central to Coforge’s business strategy.

Today:

• 86% of total revenue comes from AI-led engineering, cloud, and data services.
• AI-led engineering contributes 50.4% of total revenue.
• Data & Integration accounts for 20.9%.
• Cloud services contribute 14.8%.

The company also launched three major AI platforms during the quarter:

• Coforge Nuuron
• NEXA for insurance companies
• Aeronova.AI for airlines

The next challenge will be converting these platforms into recurring revenue streams.

Encora Acquisition Brings Scale Along With Debt

The USD 1.49 billion Encora acquisition significantly expands Coforge’s global footprint.

However, the transaction also introduces financial considerations:

• USD 1.33 billion recorded as goodwill.
• USD 550 million acquisition debt at 4.6% interest.
• Total borrowings increased from Rs 399.7 crore to Rs 5,380.3 crore.

Future quarters will determine how effectively management extracts synergies while managing higher financing costs.

Cash Flow Remains Healthy

Despite the acquisition, cash generation remained strong.

Highlights include:

• Operating cash flow of USD 57.6 million.
• Free cash flow of USD 52.9 million, equal to 95.3% of PAT.
• Days Sales Outstanding improved from 107 days to 102 days.
• Cash balance stood at USD 146.7 million.

These metrics indicate continued financial discipline.

Workforce Crosses 46,000 Employees

Following the Encora integration:

• Total headcount increased to 46,228 employees.
• Organic net hiring stood at 1,195.
• Attrition improved to 10.4%.
• Employee utilization remained healthy at 82.5%.

The workforce expansion supports future delivery capacity.

Interim Dividend Announced

The board declared an interim dividend of Rs 4 per share, with August 3, 2026, fixed as the record date.

Outlook: Scale Achieved, Organic Growth Becomes the Next Milestone

Coforge has entered a significantly larger league following the Encora acquisition. The company delivered strong revenue growth, maintained industry-leading margins, generated healthy cash flows, and built a record USD 2.23 billion executable order book.

However, investors should distinguish acquisition-driven expansion from underlying business momentum. Organic constant-currency growth remained modest at 1.1%, improving to 5.2% only after adjusting for planned business exits.

Going forward, the market will closely watch whether Coforge can successfully integrate Encora, manage its higher debt burden, monetize its expanding AI platform portfolio, and accelerate sustainable organic growth.

The sharp 9% rise in the stock price reflects investor confidence in the company’s execution. Sustaining that optimism will depend on converting acquired scale into consistent earnings growth over the coming quarters.

 

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