Given Five-stars proven track record coupled with its unique positioning and deep understanding of its customer segment, we expect the company to maintain its growth trajectory and deliver on profitability and asset quality metrics with RoEs expected to reach 21.4% by FY26E. We maintain BUY with a revised target price of INR 1020 (valuing at 4x FY26E BVPS).
The consolidation in Nifty Pharma index is likely to breakout on the upside, says Jatin Gedia, who is a technical research analyst at Sharekhan by BNP Paribas.
Coforge also announced acquisition of Cigniti Tech (CIGN IN; NR), an assurance (testing) company. Management believes Cigniti complements Coforges verticals, geo footprint and client relationships. Coforge has done comprehensive audit (financial and forensic) of the target and finds comfort in scaled relationships and in-place contracts (MSAs over SOWs). We estimate that at current price, the acquisition will be EPS accretive.
The brokerage also increased the target price for other key players in the sector with Bharti Airtels target at Rs 1,430 and Reliance Industries target price at Rs 3,340, foreseeing an upside of 13.5% and 17.4%, respectively.