The Indian IT services company lifted its FY27 EBIT margin target to 16% after AI-driven productivity gains, record deal wins and easing costs strengthened its outlook.
Coforge has lifted its margin target for fiscal 2027 after saying artificial intelligence is helping it run delivery and back-office operations more efficiently, a shift that the Indian technology services company says should support stronger profitability over the next two years.
At its earnings call for the quarter ended September, Chief Executive Sudhir Singh said the company now expects a consolidated EBIT margin of 16% in FY27, up from an earlier goal of 15.5%. Singh said Coforge wants to rank among the top three IT services firms on EBIT margin in the near to medium term. The company also said it is aiming for a reported EBIT margin of 17% in the fourth quarter, helped by gains from AI-enabled processes and a better mix of work.
The September quarter showed those benefits beginning to come through. Consolidated EBIT margin was 16%, while the standalone business posted 17%. Revenue reached $652.2 million, or Rs 6,170.8 crore, up 10.9% sequentially in constant currency and 10.1% in dollar terms. Organic growth was 3.8% in constant currency. Chief Financial Officer Saurabh Goel said Encora, which Coforge acquired this year, was broadly flat sequentially but should start moving in line with the core business from the third quarter.
Goel also said AI-led productivity improvements in fixed-price contracts should feed more clearly into margins in the December quarter. He pointed to utilisation of 82.4%, below the level at many rivals, and said combined general and administrative costs eased to 6.3% of revenue from 6.6% in the previous quarter. On the call, he said the company had not cut jobs and was instead using technology to support growth without adding proportionately to headcount.
The wider business picture was also strong. Coforge said order intake crossed $1 billion, rising 51% sequentially and 102% from a year earlier, after it signed eight large deals, the most in any quarter in its history. Those wins included a $230 million public sector contract in the UK, and Singh said the company hopes to sign at least eight more large deals in the third quarter. The next-12-month executable order book climbed to $2.4 billion from $1.64 billion a year earlier, while a second client moved above a $100 million annualised revenue run-rate.
Profitability should also benefit from a lighter drag from currency hedges and one-off charges. Goel said hedge losses of $10.2 million in the quarter should ease over the rest of the year, with mark-to-market losses expected to narrow in the third and fourth quarters. Exceptional items of $5.9 million should fall away next quarter, and he said earnings per share could rise to Rs 19-20 in the fourth quarter. Free cash flow came in at $53.8 million, equal to 89% of profit after tax, and 92% for the first half. Headcount increased by 1,137 to 47,365, while attrition stood at 10.4%.
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