Coforge, a mid-cap player in the IT services sector, is gearing up for a remarkable growth trajectory in FY26, thanks to a healthy influx of large contracts and an increasing demand for AI-driven solutions. Despite ongoing global economic challenges and tariff issues, CEO Sudhir Singh remains optimistic about the company’s future. In a recent conversation, he highlighted the promising momentum Coforge is experiencing, emphasizing its consistent profitability and broad-based growth.
Promising Growth Forecast for FY26
Singh expressed a robust outlook for the upcoming fiscal year, stating, “I foresee exceptional growth in FY26, even with the current tariff hurdles.” He anticipates a significant rise in Ebit, noting, “We expect a notable expansion, which will be substantial.” Singh also mentioned that the firm is poised for increased activity in large deal closures, asserting, “The volume and average size of large deals are expected to rise in FY26 compared to FY25.”
Stellar Performance in FY25
Coforge wrapped up FY25 with impressive financial results. The company recorded a 21.2% year-on-year increase in net profit for the fourth quarter, reaching Rs 261 crore. Revenue also climbed by 4.7%, totaling Rs 3,410 crore. With Ebit rising to Rs 449.4 crore (a 15.5% increase) and operating margins improving from 11.9% to 13.2%, the overall fiscal performance was robust. For the entire year, net profit edged up to Rs 812 crore from Rs 808 crore in FY24, while annual revenue soared 33.7% to Rs 12,051 crore.
- Fourth Quarter Highlights:
- Order intake reached $2.1 billion, fueled by five major deals across North America, the UK, and the APAC region.
- Singh noted that FY25 was particularly noteworthy, revealing, “The firm experienced 32% growth in constant currency, driven by 14 large deals and broad growth across all sectors.”
Strategic Focus on Long-Term Deals
Unlike many of its competitors that depend heavily on discretionary spending, Coforge’s business model prioritizes long-term deal closures. Singh explained, “Our sales strategy is centered on the number of large deals closed, rather than immediate revenue or total contract value signed.” This approach helps Coforge enhance its share of customer wallets and insulates the firm from short-term fluctuations in discretionary IT spending.
Leveraging AI for Growth
A key driver of Coforge’s expansion is its focus on artificial intelligence, particularly generative AI (GenAI). Singh indicated that GenAI has been pivotal in driving revenue growth, with AI solutions incorporated into three of the five large deals secured in Q4. He remarked, “GenAI has significantly boosted our revenue,” noting productivity increases of up to 30% in legacy modernization projects, though these gains can vary.
Notably, Singh assured that these productivity enhancements do not compromise profit margins. “We are sharing AI-driven productivity benefits with our clients commensurate with what we experience,” he clarified, ensuring there’s no margin pressure.
Aggressive Hiring Strategy
Coforge is actively expanding its workforce, having increased its net headcount by 29% in FY25. Singh stated, “Given our confidence in growth for FY26, we are already in the process of hiring and will continue to do so.” The focus will be on recruiting fresh talent, especially in AI, analytics, and cloud technologies.
Balanced Geographical and Sector Exposure
Singh emphasized the importance of Coforge’s diverse exposure across various sectors and regions, contributing to the company’s resilience. “We anticipate balanced growth across geographies, which fuels our confidence,” he concluded.
Coforge is clearly positioning itself for a successful FY26, backed by strategic long-term deals, innovative AI solutions, and a commitment to talent acquisition. This mid-cap IT firm is on a path that not only aims for growth but also focuses on sustainable profitability and resilience in a challenging economic landscape.
