rewrite this title and make it good for SEOCoforge shares rally 6% after Q2 net profit rockets 86% YoY. Should you buy, sell or hold?

Shares of mid-tier IT services company Coforge rallied 6% to their day’s high of Rs 1,867 on Monday, October 27, after the company reported an 86% year-on-year growth in its net profit for the September-ended quarter at Rs 376 crore compared to Rs 202 crore in the year-ago period.

The profit after tax (PAT) was attributable to the company’s owners. Coforge’s revenue from operations in the July-September quarter stood at Rs 3,986 crore compared to Rs 3,026 crore in Q2 FY25, rising 32% YoY.

The company’s board has recommended an interim dividend of Rs 4 per share and has set the record date on October 31, 2025. The bottom line rose 18% on a sequential basis, while the top line saw an 8% quarter-on-quarter uptick. In dollar terms, revenue stood at $462 million, recording a 4.5% QoQ growth while rising 6% in CC terms sequentially.

The company’s Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) in the quarter under review stood at Rs 728 crore, up 15.3% QoQ and 48% YoY, while the EBITDA margin was reported at 18.3%, up 115 bps QoQ and 199 bps YoY

What are experts saying?

Nuvama maintains a Buy rating on Coforge with an upgraded target price of Rs 2,250 (up from Rs 2,000). The brokerage highlighted that revenue grew 5.9% QoQ (constant currency) to $462 million, in line with estimates, while EBIT margin expanded 250 bps QoQ to 14%, above the 13.6% estimate. Adjusted PAT rose 18.4% QoQ to Rs 370 crore, slightly beating expectations. The 12-month executable order book remains strong at $1.6 billion (+25% YoY). Management has addressed concerns on margins and cash flow, paving the way for potential re-rating. Nuvama has raised FY26E/FY27E EPS by 2.6%/4.6% due to better margins and lower interest costs. Valuation rollover to 38x FY27E–28E PE supports the revised target price, it said. Elara maintains an Accumulate rating with a target price of Rs 2,010. Top verticals — Banking, Insurance, and Travel — remain strong, supported by digital, cybersecurity, and regulatory-led investments. The company has de-risked client concentration (top 5 clients now 18.6% vs 30% in FY18), with headcount at almost 35,000 and attrition stable at 11.4%. Earnings estimates were raised 4–7% for FY26–27E, projecting over 40% earnings CAGR over FY25–27, aided by Cigniti integration and strong order momentum. Elara values Coforge at 39x FY27E P/E given strong earnings visibility.Nomura maintains a Buy rating on Coforge with a target price of Rs 1,900. The brokerage noted that the 12-month executable order book at $1.64 billion (+27% YoY) and timely ramp-up of recently won projects set the stage for strong growth in 2HFY26F. Coforge is expected to post 29% YoY revenue growth (in $) in FY26F versus 15% in FY25. Nomura has raised FY26–28F EPS by 1–2%, mainly due to slightly better EBIT margin assumptions. Nomura also highlighted that earlier concerns around one-off EBIT margin adjustments and negative free cash flow (FCF) from data center investments were addressed in 2QFY26. While salary increments are scheduled in 3Q, they are expected to be largely offset by lower ESOP and depreciation costs. Management aims to sustain EBIT margins at 14% and will reinvest any significant improvement toward growth.

Shares of the company ended the Friday session at Rs 1,760, higher by 0.3% from the last close on the NSE. Coforge shares have gained nearly 20% in the last 6 months.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)