Coforge falls 3% on Q2 miss despite margin upgrade

rge Limited (COFORGE) opened as much as 3% lower on October 26 after its Q2 FY27 results missed growth and profit estimates, and Citi kept its Sell rating with a ₹1,750 target. The company had reported the results on Friday, October 23. Revenue rose 10.1% sequentially to $652.2 million, and 10.9% in constant currency. Consolidated net profit grew 42% year-on-year to ₹605 crore. EBIT margin came in at 16%, and the company raised its FY27 EBIT margin guidance to 16% from 15.5%. Order intake topped $1 billion, only the second time in its history, and the executable order book grew 7% sequentially to $2.4 billion. The margin story is strong. Management expects a 17% EBIT margin in Q4 and said FY28 should start from at least that level, citing AI-led efficiencies. Free cash flow conversion was 89% of profit, and Jefferies expects 14% organic revenue growth and 26% EPS growth annually. The record order intake gives good revenue visibility. The growth headline is mostly acquisition-driven. Constant currency growth of 10.9% missed the 12.5% estimate, and organic growth was only 3.8%, with the rest coming from the Encora acquisition. Net profit of ₹605 crore also missed the ₹660 crore estimate, partly because of ₹97.1 crore in hedge losses. Citi flagged that delivery against the 16% guidance and 17% Q4 exit margin will be the key tests. Investors should watch organic revenue growth, Encora integration and margins, delivery on the 17% Q4 EBIT target, and hedge losses. The key question is whether Coforge can deliver strong organic growth, not just acquisition-led growth and margin gains. Disclosure: I do not hold any position in Coforge Limited. This post is for informational purposes only and is not investment advice.