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


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.
Disclaimer – I ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is acting as a distributor to solicit bond related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.
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