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View Risks →Coforge Ltd — Q2 FY24
Coforge delivered a strong Q2 FY24 with revenue growth of 16.2% YoY in CC terms and an adjusted EBITDA margin of 17.6%, expanding 160 bps sequentially.
bullish
high
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Coforge delivered a strong Q2 FY24 with revenue growth of 16.2% YoY in CC terms and an adjusted EBITDA margin of 17.6%, expanding 160 bps sequentially. Growth was broad-based across verticals, with BFSI up 3.8% QoQ and insurance up 2.4% QoQ. Order intake remained robust at $313 million, marking the seventh consecutive quarter above $300 million, and the executable order book stood at $935 million, up 16.6% YoY. Management reiterated FY24 revenue guidance of 13%-16% CC and flat adjusted EBITDA margins, supported by hedge gains and ARC initiatives in H2. Key risks include persistent macro uncertainty and potential furlough impact in Q3.
कोफोर्ज ने दूसरी तिमाही (Q2 FY24) में मजबूत प्रदर्शन किया। कंपनी की आय (रेवेन्यू) पिछले साल की तुलना में 16.2% बढ़ी, जबकि मुनाफा (एडजस्टेड EBITDA मार्जिन) 17.6% रहा, जो पिछली तिमाही से 1.6% अधिक है। बैंकिंग और बीमा क्षेत्र में अच्छी बढ़त देखी गई। कंपनी को 313 मिलियन डॉलर के नए ऑर्डर मिले, जो लगातार सातवीं तिमाही 300 मिलियन से ऊपर है। कुल बकाया ऑर्डर 935 मिलियन डॉलर है, जो पिछले साल से 16.6% ज्यादा है। प्रबंधन ने इस साल 13-16% आय वृद्धि का अनुमान दोहराया है। हालांकि, बाजार में अनिश्चितता और तीसरी तिमाही में छुट्टियों के कारण काम कम होने का जोखिम है।
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Read Transcript →Quarter Snapshot
Order Intake
$313M
+16.6% YoY
Seventh consecutive quarter above $300 million; includes three large deals.
Executable Order Book
$935M
+16.6% YoY
Total value of locked-in orders over next twelve months.
Headcount
24,638
+1.7% QoQ
Net addition of 414 employees; H1 net addition of 1,414.
Attrition (IT Services)
13%
flat
Among the lowest in Indian IT services industry.
What Changed vs Last Quarter
NEW
Q3 margin expansion of ~100 bps sequentially expected
Driven by hedge gains, absence of client event costs, and initial ARC benefits, partially offset by furloughs.
NEW
ESOP costs to normalize from Q3 and decline ~30 bps in FY25
One-time ESOP acceleration in Q2; costs expected to decline by about 30 basis points next fiscal year.
UPDATED
FY24 revenue growth guidance of 13%-16% in CC terms reiterated
Management reaffirmed the annual guidance given at the start of the year, expecting to deliver within the range despite macro challenges.
UPDATED
Adjusted EBITDA margin guidance of flat vs FY23 reiterated
Management expects full-year adjusted EBITDA margins to be similar to FY23, supported by hedge gains and ARC initiatives in H2.
DROPPED
Gross Margin Improvement of 50bps in FY24 vs FY23
Management reiterated conviction that gross margin will improve by 50 basis points over FY23 in FY24.
DROPPED
Operating Cash Flow to be 70% of EBITDA for FY24
Management expects full-year operating cash flow to be 70% of EBITDA, in line with historical trends.
NEW RISK
Persistent macroeconomic uncertainty
Management acknowledged that the macro environment remains challenging and could stress demand, especially in discretionary spending.
NEW RISK
Q3 furloughs may impact revenue and margins
Management expects furloughs in Q3, which could offset some of the margin gains from hedge and ARC initiatives.
NEW RISK
ARC cost reduction progress slower than planned
Management admitted they are not happy with ARC progress in H1 and are relying on aggressive actions in H2 to meet targets.
NEW RISK
Potential slowdown in travel vertical spend
Management noted initial signs of normalization in travel spend, which could impact growth in that vertical.
RISK GONE
Sustained Macro Uncertainty in BFS
BFS clients remain in wait-and-watch mode, with discretionary spending deferrals potentially impacting growth if macro conditions worsen.
RISK GONE
AI Deflationary Impact on BPO and Testing
Management acknowledged that AI could disrupt BPO and testing revenue streams, though net impact is expected to be positive.
RISK GONE
Margin Pressure from Investments and Hedge Losses
Q1 margins were impacted by salary hikes, visa costs, and hedge losses; any deviation from expected ramp-up could pressure full-year margin guidance.
RISK GONE
Potential Slippages in Executable Order Book
An analyst questioned whether macro uncertainty could cause deal slippages; management expressed confidence but acknowledged the risk.
Fast read
Guidance and risk preview
Management reaffirmed the annual guidance given at the start of the year, expecting to deliver within the range despite macro challenges.
Management acknowledged that the macro environment remains challenging and could stress demand, especially in discretionary spending.
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