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Oct 24 (Reuters) - Indian IT services firm Coforge (COFO.NS), opens new tab reported a better-than-expected 86% surge in second-quarter profit as client spending picked up across the sector.
Consolidated net profit rose to 3.76 billion rupees in the quarter ended Sept. 30, above analysts' average expectation of 3.71 billion rupees, according to data compiled by LSEG.
Revenue rose 31.7% to 39.86 billion rupees ($453.50 million), largely in line with analysts' estimate of 40.33 billion rupees.
However, Coforge's deal wins for the quarter were marginally lower at $514 million from $516 million last year.
KEY CONTEXT
Coforge's results come as larger rivals Tata Consultancy Services (TCS.NS), opens new tab, Infosys (INFY.NS), opens new tab and Wipro (WIPR.NS), opens new tab beat estimates for quarterly revenue and expect to see improving demand in the second half of the fiscal year.
Strong deal wins and clients' growing willingness to invest in AI projects are seen as key drivers for the industry.
Analysts also attributed realisations from Coforge's $1.5 billion deal with U.S. client Sabre as a significant factor.
PEER COMPARISON
Valuation (next 12 months) | Estimates (next 12 months) | Analysts' sentiment | |||||||
RIC | PE | EV/EBITDA | Revenue growth(%) | Profit growth(%) | Mean rating* | # of analysts | Stock to price target** | Div yield (%) | |
Coforge | 35.97 | 19.38 | 23.88 | 42.63 | Buy | 32 | 0.93 | 0.89 | |
Persistent Systems | 44.45 | 29.93 | 19.01 | 23.90 | Hold | 36 | 0.97 | 0.61 | |
Mphasis | 25.20 | 15.94 | 10.87 | 12.27 | Buy | 35 | 0.91 | 2.12 | |
Tech Mahindra | 21.62 | 14.16 | 5.88 | 24.21 | Hold | 42 | 0.93 | 3.11 |
* Mean of analysts' ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** Ratio of the stock's last close to analysts' mean price target; a ratio above 1 means the stock is trading above the PT
JULY-SEPT STOCK PERFORMANCE
($1 = 87.8950 Indian rupees)
Reporting by Aleef Jahan and Sai Ishwarbharath B; Editing by Ronojoy Mazumdar and Janane Venkatraman
Our Standards: The Thomson Reuters Trust Principles., opens new tab