Coforge Q1 FY26: Growth Momentum Sustained, Margins Expand

Coforge reported another strong quarter with 56% YoY revenue growth and 88% YoY net profit growth. At first glance, it looks like the IT mid-cap is simply riding the industry upcycle. But a deeper look suggests something more structural: QoQ vs YoY Growth Context Sales rose 8% QoQ (3,410 → 3,689). This consistency shows that growth is not just a one-off base effect, but sustained deal momentum. Importantly, margins expanded — EBIDT margin improved from 15.5% in Jun 2024 to 15.6% in Mar 2025, and further to 15.6%+ in Jun 2025, showing operational leverage kicking in despite wage hikes (seasonally typical in Q1 for IT). Profitability Outpaces Revenue Net profit grew faster (88% YoY) than revenue (56% YoY). This suggests better cost discipline and possibly a richer deal mix (more digital + BFSI/insurance segments where Coforge has strengths). EPS Scaling EPS jumped 138% YoY to ₹9.49. The magnitude is disproportionate to net profit growth, hinting at lower dilution or improved efficiency in capital allocation. Valuation Check At a PE of ~57, the stock already discounts a lot of growth. The market is pricing Coforge closer to a large-cap IT player, which raises the bar for sustaining such high growth. Takeaway: The key insight is that this is not just “broad IT recovery.” Coforge’s numbers show margin resilience in a wage-cost heavy quarter and profit growth that outpaces sales, pointing towards execution strength. But with valuations stretched, investors will watch if this momentum can continue for multiple quarters.