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Coforge: $1.56 billion 13-year deal win to ease growth concerns and justify premium valuations

ICICIdirect Research 07 Mar 2025 DISCLAIMER

Coforge has secured its largest ever deal, a 13-year contract worth US$1.56 billion (₹13,600 crore) with Sabre Corp wherein Coforge will manage software product delivery and execute AI-led initiatives for Sabre.

This agreement is expected to contribute an average annual revenue of US$120 million, which will be significant at ~7.5% of current annualised revenues.

The deal is expected to significantly boost the company’s revenue from the travel sector, which currently contributes about a fifth of its total revenues. Riding on this momentum, Coforge is targeting US$2 billion in revenue by FY27 (vs. current annualised run rate of US$1.6 billion), implying a ~12% CAGR over FY25-FY27E. 

This development partially addresses the concern regarding growth alignment with valuation. Furthermore, considering the recent stock price correction of about 25% from its peak, we adopt a positive stance on Coforge and upgrade to ‘BUY’ with a target price of ₹9,200 ; at 36x P/E on FY27E EPS.

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