Coforge Ltd — Q3 FY24
Coforge reported a solid Q3 FY24 with organic CC revenue growth of 14.7% YTD and sequential growth of 1.8% CC, despite unusually high furloughs in BFS and a depressed demand env...
neutral
medium
✓ Verified against BSE filing
Claim Ledger
Did management answer the analysts?
Every material analyst question, graded on whether management actually answered it — with the verbatim exchange and quantitative claims checked against filed numbers.
88%Questions answered1Evaded / deflected12Questions auditedMixedNumbers vs filing
Answered
High priority
Context on additional environment issues and furlough reversal in Q4.
Asked by Sulabh Govila, Morgan Stanley
Management directly answered both parts with specific margin impact and reversal expectation.
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Question
Just wanted to understand what has additionally come in, and if you could provide some context around which areas and which verticals and when would you expect this to reverse, or would it be a headwind in the coming quarters? The furloughs that you mentioned are they reversing completely in the coming quarter?
Sudhir Singh, CEO and Executive Director
Furloughs have stopped in our context... We have lost close to 40bps-50 bps by our estimate in Q3 margins because of higher than anticipated furloughs. We expect to recoup all of it back in quarter four.
Answered
High priority
Margin outlook for Q4 and full year Adjusted EBITDA.
Asked by Sulabh Govila, Morgan Stanley
CFO gave specific bps improvement range and confirmed margins would exceed last year's Q4.
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Question
If I take that as the exit margin, then a full year margin would be close to 17.8% on an Adjusted EBITDA basis, which is 50 basis points lower than last year, versus our initial expectation of a flattish year. Is that the correct understanding that we have for now?
Saurabh Goel, CFO
We are looking at least around 150 bps-200 bps margin improvement... we expect the margins to significantly go up from the current quarter and also higher than the levels of what we delivered last year.
Answered
High priority
Green shoots in BFS vertical and demand recovery timeline.
Asked by Vibhor Singhal, Nuvama Group
CEO identified specific green shoots and gave a timeline for potential reversal.
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Question
From an overall demand perspective, are you seeing any kind of... things coming back into the sector, or by your experience, when do you think we could see some green shoots in the banking segment, down the year, on this slide?
Sudhir Singh, CEO and Executive Director
There are green shoots in the context of going for growth in the driving agility in software delivery... Aggregate budgets have not increased. We suspect that if there is gonna be a reversal in that situation, it will take another 4 months-6 months.
Answered
Medium priority
Plans to reduce debt and refinance to lower interest costs.
Asked by Vibhor Singhal, Nuvama Group
CFO provided specific timeline for restructuring and repayment.
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Question
Any plans on reducing the debt that we have on the balance sheet that we have taken up, or maybe refinancing it, in some manner to reduce interest costs?
Saurabh Goel, CFO
We are looking at restructuring the loan in quarter one of next financial year. The payment is expected in April 2024.
Partial answer
Medium priority
ESOP plan implications and capital allocation policy.
Asked by Dipesh Mehta, Emkay Global Financial Services
CFO explained the ESOP plan but deferred cost quantification until grants are issued.
deferred cost quantification
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Question
First, just want to get some clarity about the ESOP plan... any implication on likely ESOP cost? Second question is about earlier... FY 2025, likely to be better than 2024... Last question is about capital allocation.
Saurabh Goel, CFO
Board has now approved three percent of the pool to be created... Once the new ESOP pool is created, grants are being issued, only then we'll be able to determine what the cost will be.
Answered
High priority
Competitive situation and pricing pressure changes.
Asked by Girish Pai, Nirmal Bang
CEO directly stated competition remains high and unchanged.
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Question
You talked about a competitive situation where there was a lot of price-based tussle going on between various players. Has the competitive situation improved or worsened, or it still remains the same?
Sudhir Singh, CEO and Executive Director
It's highly competitive out there... Pricing pressure is not easy. It continues to be really competitive out there. Nothing's changed over the last five quarters.
Answered
High priority
Generative AI deflationary pressures and revenue impact.
Asked by Girish Pai, Nirmal Bang
CEO clearly denied deflationary impact and cited revenue creation examples.
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Question
The other comment that you made in that Analyst Meet was around generative AI, where you kind of hinted at potential deflationary pressures coming from there. Do you see that kind of panning out in the immediate term, or you think it's going to be, like, somewhere down the pipe?
Sudhir Singh, CEO and Executive Director
No, we're not really seeing generative AI bringing in deflationary pressures at all... we do see a revenue creation exercise here.
Evasive
High priority
FY2025 growth replication and margin tailwinds.
Asked by Sandeep Shah, Equirus Securities
CEO deferred guidance to next quarter instead of answering the growth replication question.
deferred to next quarter
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Question
Is it fair to assume, in a worst case scenario also, what we achieve in a constant currency growth in FY 2024, we can actually replicate that in FY 2025?
Sudhir Singh, CEO and Executive Director
We'll talk about guidance after factoring in everything that we see, with hopefully demand settling down a little bit more by the time we have a conversation, end of April.
Answered
High priority
FY2025 margin tailwinds from utilization and SG&A leverage.
Asked by Sandeep Shah, Equirus Securities
CEO explicitly confirmed margin improvement and cited specific tailwinds.
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Question
Is it fair to assume FY 2025 could see slightly higher tailwinds in terms of average resource cost, as well as some amount of SG&A leverage versus the investment which we are doing in S&M?
Sudhir Singh, CEO and Executive Director
Next year margins will clearly be higher. They'll be higher because... offshore revenue percentage as a base, would have gone up... There are clearly tailwinds around... average resource cost.
Answered
High priority
Quantification of new deal component in large deal wins.
Asked by Shradha Agrawal, Asian Markets Securities
CEO provided breakdown of new vs renewal and verticals for each deal.
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Question
Can you quantify, is it more of renewables or is there some new deal component involved in it? If yes, what could be the quantum of new deal signing? What verticals are they spread across?
Sudhir Singh, CEO and Executive Director
Out of the three deals, one is 100% NN, Net New. The second one is essentially EN, but most of it is new revenue... the third one... half of that is new for us. Verticals... insurance, banking, and Public sector in U.K.
Answered
High priority
BFS pipeline and program types driving growth.
Asked by Ravi Menon, Macquarie Capital
CEO described specific program areas and confirmed pipeline strength.
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Question
You talked about how BFS continues to be having a difficult time, but last four quarters you delivered good growth in BFS. Could you give us some idea about what sort of programs are you seeing, and what's the pipeline looking like over there?
Sudhir Singh, CEO and Executive Director
The pipeline from our vantage continues to be good... Innovation, speed, agility in software delivery and compliance reg. Those are the 3 spaces where we are finding happy hunting grounds.
Answered
Medium priority
Board refresh status and future additions.
Asked by Kawaljeet Saluja, Kotak Institutional Equities
CEO provided specific board size and status of candidate identification.
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Question
Is the Board refresh complete, post the change in post exit of Baring, or that's something which will materialize completely at a later date? Second, if there are going to be additions, what's the type of additions you would love to see here?
Sudhir Singh, CEO and Executive Director
The immediate Board size that we will be going forward with will be a Board constituted of six members. At this point in time, we have line of sight to all six.
Quantitative claims vs filed numbers
| Claim | Management said | Filing | Verdict |
|---|---|---|---|
| Q3 revenue $282 million, sequential growth 1.8% CC | 282 | 2,323 | Understated vs filing |
| Adjusted EBITDA margin expansion 39 bps sequentially | 39 bps | 39 bps | Matches filing |
| Consolidated PAT INR 2,380 million, up 31.5% QoQ | ₹2,380 cr | ₹243 cr | Overstated vs filing |
Filed figures sourced from Screener.in. Claims within a small tolerance of the filing are marked “matches filing”.