Coforge Ltd. Declines Amid US Tariff Impact on Indian IT Sector
Business and Industry Overview:
Coforge Ltd. is an IT company that provides technology services to businesses. It was earlier called NIIT Technologies but changed its name to Coforge in 2020. The company has offices in Noida, India, and New Jersey, USA. It works with different industries like banking, insurance, travel, healthcare, and government. Coforge helps businesses by providing cloud computing, artificial intelligence (AI), automation, and cybersecurity services. It helps companies improve their digital systems so they can work faster and better. Coforge’s shares are traded on India’s two biggest stock markets, BSE and NSE. The stock trades under the symbol COFORGE. The company started in 1992 as part of NIIT Ltd, a well-known IT company in India. Over time, Coforge grew by buying other companies and working with big businesses. In 2006, Coforge bought a UK-based insurance solutions company. It also partnered with Adecco SA, a company that helps businesses find employees. It has expanded by buying other companies and making new technology solutions. It works with big businesses and government projects. The company is also active in social and environmental work. It continues to grow and improve its services in the IT industry. It helps businesses with technology services. It works with banks, insurance companies, travel companies, and hospitals. It competes with big IT companies like TCS, Infosys, and Wipro. But it focuses on special services to stand out. Coforge helps businesses go digital. It provides cloud computing, AI, and automation services. The company has offices in many countries. It works with clients all over the world. Coforge grows by buying other companies. It bought RuleTek in 2018. It bought SLK Global in 2021. It bought Cigniti Technologies in 2024. These help Coforge get more skills and clients. Coforge gives custom services to each client. It works closely with them. It is smaller than big IT firms. But it moves fast and makes quick changes. The company faces strong competition. But it keeps growing. It uses smart ideas and new technology. It focuses on AI, cloud computing, and automation. This helps it stay strong in the market. Coforge has a bright future. It will keep growing and improving.
Latest Stock News:
On April 3, 2025, Coforge’s stock fell by 7%. This happened because the U.S. increased the tax on Indian goods. The new tax is 26%. Before, it was only 3%. This made investors worried. The IT sector depends on the U.S., so this tax may reduce profits. The Nifty IT index also fell by 3%. Many IT companies lost value. Coforge and Mphasis were hit the hardest. Their stocks fell by up to 8%. Investors sold shares because they feared losses. This made prices drop more. Before this, Coforge was doing well. In March 2025, it announced a 1:5 stock split. This means one share became five. This made shares cheaper. More people could buy them. After this, the stock went up for some time. In Q3 FY25, profit grew by 10.3% to ₹268 crore. Revenue increased by 42.8%. The company also gave dividends to investors. This showed Coforge was strong.
But the new U.S. tax created fear so this made the stock fall fast. Coforge Limited received a tax demand of ₹1,84,98,06,803 from the Income Tax Department on March 28, 2025. This includes ₹48,46,59,591 as interest. The issue is due to transfer pricing adjustments. The tax department says Coforge should have a 32.5% profit margin instead of 11.6%. Coforge does not agree with this. The company believes this issue will be resolved in its favour. It says this will not harm its financial position.
On March 27, 2025, Coforge announced its collaboration with Microsoft to improve developer productivity. It is using AI tools like GitHub Copilot. It has trained over 10,000 developers. These developers are updating old software and creating new applications. This has led to 30% more efficiency. Coforge has also received special recognition from Microsoft. This shows its high level of expertise in AI-powered development.
Potentials:
Coforge has big growth plans. It wants to double its revenue to $2 billion in five years. It plans to grow organically and through acquisitions. It may also buy more companies to increase revenue. The company believes it can reach $4 billion in less than four years. Its long-term goal is to cross $6 billion in annual revenue. Coforge is expanding globally. It will open a new office in New York. It is also strengthening its presence in the UAE. The company is focusing on key markets like North America, the Middle East, Europe, and APAC. It wants to double its revenue to $2 billion in the next five years. It also wants to become one of the top five IT companies in India. The company will focus on digital services and global expansion. It will use new technology and buy other companies to grow faster. Coforge recently bought Cigniti Ltd. This will help it offer better IT services. The company also plans to buy more companies in the future. These will be smaller deals than the Cigniti deal. If Coforge keeps growing at the same speed, it may reach $4 billion in revenue in four years. Its long-term goal is to earn more than $6 billion per year. To expand, Coforge is opening a new office in New York. This will help it work better with U.S. clients. The company is also strengthening its business in the UAE to grow in the Middle East market. Coforge is focusing on Asia-Pacific, Middle East & Africa, North America, Europe, and the UK. It will make special IT solutions for each of these regions. Coforge will invest in AI, cloud computing, and cybersecurity. These technologies are very important for the future of IT. The company is also focusing on industries like banking, healthcare, and insurance. These industries need IT services the most. But there is a challenge. The U.S. has put a 26% tax on Indian imports. This is bad news because the U.S. is a big market for Indian IT companies. These taxes may increase costs and reduce profits. However, Coforge is finding ways to deal with this problem. It is also growing in other countries to reduce risks. Coforge is confident about the future. It has big goals and strong plans to achieve them.
Analyst Insights:
- Market capitalisation: ₹ 10,466 Cr.
- Current Price: ₹ 231
- 52-Week High/Low: ₹ 359 / 130
- P/E Ratio: 28.4
- Dividend Yield: 0.25%
- Return on Capital Employed (ROCE): 20.6%
- Return on Equity (ROE): 16.5%
Coforge Ltd is growing well. Its sales and profits are increasing every year. In the last three years, sales grew 25% per year and profits grew 20% per year. Big investors own 89% of the company, which shows they trust it. The company uses its money well. It earns ₹28.6 for every ₹100 it invests. It also pays good dividends. It gives 54% of its profit to investors. But there are some problems. The stock price is very high. It is 62.5 times its earnings, which means it may be too expensive. The company’s profits from sales are falling. Before, it made ₹18 profit for every ₹100 sales, but now it makes only ₹13. The company also has more debt now. Two years ago, it had ₹490 crore in debt. Now, it has ₹1,064 crore debt. This can cause problems if not managed well. Also, the old owner (Hulst B.V.) has left. This creates uncertainty. The company is strong, but the stock is too expensive. Profits from sales are falling, and debt is rising. It is better to wait and buy at a lower price or when profits improve.