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Investing.com - Kotak has reiterated its Buy rating and INR2,000.00 price target on Coforge Ltd (NS:COFORGE) following a review of the company’s FY2025 annual report.
The research firm noted that the annual report contained "no material surprises beyond what is already widely known" about the IT services company’s performance and financial position.
Kotak highlighted several key points from the report, including an increase in contract costs to 6.1% of revenues on a gross basis (3.6% net of corresponding liability) and a sharp increase in capital expenditure related to data center construction as part of a client contract.
The analysis also pointed out that Coforge’s days sales outstanding (DSO) has increased, driven by non-current unbilled and current billed amounts, while other income included significant one-time elements that benefited profit before tax, partially offsetting increased legal and professional costs from the Cigniti acquisition.
While acknowledging that "Coforge has done well in scaling the business up," Kotak suggested the company "can pay more attention toward reducing costs involved in growth," also noting that wage hikes have moderated over the past three years.
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