Coforge Q1 results defy industry trends as AI-led services drive 63% profit surge

Coforge says AI lifted margins. Rivals see 'AI deflation'.

The Indian engineering firm grew 33% in dollar terms while the six largest players are forecast to manage 2.8%. Its results release never says how much was organic. Coforge reported first quarter revenue of $592.2m on Monday. That is a rise of 33% in dollar terms over the year, and 21.1% on the previous quarter. In rupees the annual increase reads 49%. Profit after tax reached $55.6m. Those numbers land in an industry bracing to shrink. HCL Technologies has warned of "AI deflation". Its chief executive C. Vijayakumar said revenue would fall by three to five percent in the coming year, The Register reported in April. Analysts expect the six largest Indian IT firms to manage 2.8% constant currency growth this financial year. Coforge grew roughly twelve times faster than that forecast, and it credits the technology its rivals blame. "The confluence of our next twelve month signed order book of $2.23 billion, an exceptionally strong large deal pipeline and differentiated capabilities with 86% of our revenues coming from AI-led engineering, data and cloud services has set us up to be the industry growth leader for the third year running," said Sudhir Singh, chief executive and executive director. The margin claim Operating margins moved sharply. EBIT margin reached 16.0%, a gain of 414 basis points over the year. EBITDA margin reached 20.3%, up 285 basis points. Singh attributed the expansion to "the impact of AI infusion at scale in client delivery and internal operations". He also said the quarter beat the company's own targets, adding that "consolidated Q1 margins have come ahead of our annual margin guidance". The claim inverts the deflation thesis. Indian IT has historically billed for people, so cheaper delivery ought to compress revenue rather than lift margins. Staff numbers point the same way. Trailing twelve month attrition fell to 10.4%, from 10.8% a quarter earlier. The number the release leaves out Coforge closed its acquisition of Encora during the period. The deal valued Encora at $2.35bn and was paid in shares. Singh said the business is now "completely operationally integrated". Encora's owners, Advent International and Warburg Pincus, took roughly 20% of Coforge in the swap. The results release gives no organic growth figure. It also gives no earnings per share. Both gaps matter. Profit rose 110% in rupees, but the share count rose as well, so the gain for each existing shareholder is smaller than the headline suggests. One line does not reconcile Every headline figure appears in both currencies. Three of the four pairs behave consistently. Revenue, EBITDA and EBIT each imply the rupee weakened by about 12% against the dollar over the year. The profit line does not. Growth of 110% in rupees alongside 46% in dollars implies a move closer to 44%. The release does not explain the difference. What the pipeline shows The forward indicators are strong. Coforge signed $691m of total contract value in the quarter, across four large deals in North America, Europe and Latin America. Its executable order book for the next twelve months stands at $2.23bn, up 27% on the quarter and 44% on the year. The company separately announced a five year European contract worth more than $230m last week. An order book is a set of signed commitments rather than recognised revenue. It remains the clearest evidence that the demand is real. Everyone is buying the same idea Coforge describes its workforce as including "specialized FDEs in hybrid pod-based delivery units". Forward deployed engineers sit inside the client and build there. That model is spreading fast. TCS has been hiring forward deployed AI engineers and buying capability, AWS has put $1bn behind the same idea, and the role now ranks among the defining new AI jobs. Claiming AI expands margins is not unique either. JPMorgan has told investors a similar story. Capital keeps arriving in India regardless, with Amazon committing an extra $13bn to cloud and AI there by 2030. What to watch Coforge launched three products during the quarter. Nuuron is billed as an AI operating system, NEXA targets insurers, and Aeronova.AI helps airlines move off legacy booking systems. The board recommended an interim dividend of four rupees a share. The release also discloses a registration statement on Form F-1 filed with the US Securities and Exchange Commission, which has not yet become effective. The comparison gets cleaner with time. Until Encora sits in both the current and prior year figures, the growth rate and the AI margin claim cannot be told apart.

Coforge Q1 Results: Profit soars 63% to Rs 519 crore driven by Encora acquisition, AI-led services demand

Coforge reported a remarkable 63.3 percent increase in profits for the June quarter, driven by the recent acquisition of Encora and a surge in demand for artificial intelligence solutions. Additionally, revenue soared by 49.2 percent, reaching an impressive Rs 5,527.7 crore. The company has also secured new orders amounting to USD 691 million for the quarter, projecting a stellar performance for the upcoming year. IT solutions firm Coforge on Tuesday posted a 63.3 per cent jump in consolidated net profit to Rs 518.6 crore in the June quarter, on the back of its recent acquisition of Encora and robust demand for its artificial intelligence-led engineering and cloud services. The company had reported a net profit (attributable to owners) of Rs 317.4 crore in the year-ago period, according to regulatory filings. Coforge's revenue from operations surged 49.2 per cent to Rs 5,527.7 crore in Q1 FY27, from Rs 3,704.4 crore in Q1 FY26. Seen sequentially, profit fell 15.3 per cent while revenue grew 24.2 per cent. Growth was significantly bolstered by the Encora acquisition, which was consolidated effective May 1. Coforge acquired Silicon Valley-based AI firm Encora for an enterprise value of USD 2.5 billion. The buyout contributed USD 100.7 million to the topline in just two months of the quarter. "Our Q1 performance reflects the strength of our differentiated capabilities and an execution intensity that is uniquely our own. The confluence of our next twelve-month signed order book of USD 2.23 billion, an exceptionally strong large deal pipeline and differentiated capabilities, with 86 per cent of our revenues coming from AI-led engineering, data and cloud services, has set us up to be the industry growth leader for the third year running. "With the Encora acquisition completely operationally integrated and with strong demand, record visibility, and a rapidly expanding pipeline of AI-led opportunities, FY27 is shaping up to be an exceptional performance year for the firm," said Sudhir Singh, Chief Executive Officer and Executive Director, Coforge. Coforge recorded a fresh order intake of USD 691 million during the June quarter, led by strong demand in the Americas. During the post-earnings investor call, Singh highlighted that the company's bullish commentary on the demand environment is very contrarian to the broader IT industry trend, backed by a robust pipeline. He noted that the ongoing second quarter is likely to see the highest number of large deals signed in the organisation's history. "We think we will have a bumper harvest when it comes to the number of large deals that we will close this quarter with," he said. Shedding light on the rapid turnaround of the Encora business, Singh revealed that Coforge parted ways with Encora's CEO and President on the very first day of the acquisition to take "immediate and effective control". He explained that while Encora had strong technology capabilities, its go-to-market motion was weak, necessitating the leadership change as part of Coforge's integration playbook. The company invested approximately USD 58 million in AI innovation during the previous fiscal year (FY26). Addressing the broader industry narrative, management acknowledged the reality of AI-led deflation in the traditional managed services business. However, Singh asserted that this headwind is being more than offset by strong, immediate demand tailwinds in new revenue streams. These include legacy modernisation, building data foundations, cloud infrastructure for scalable compute and machine learning operations, as well as cybersecurity. Coforge recorded a fresh order intake of USD 691 million during the June quarter, led by strong demand in the Americas. The total headcount reached 46,228 at the end of the first quarter, with a net addition of 10,451 employees year-on-year. Furthermore, Singh said Coforge continues to hire aggressively at both ends of the spectrum. The firm is specifically targeting Forward Deployed Engineers (FDEs) with 2-3 years of experience for both onsite and offshore roles. He highlighted a strong focus on hiring at the bottom of the pyramid, noting that the new generation of engineers -- raised in hackathon-driven environments focused on finding solutions rather than just gaining certifications -- are highly responsive and productive. The management did not give a fixed hiring target.

Coforge shares surge 7% after Q1 profit spikes 63% YoY

Coforge shares jumped after the IT services company posted a strong Q1 FY27 performance, with net profit rising 63% year-on-year and revenue surging 49% on the back of robust demand, new deal wins, and momentum in AI, cloud, and data services. Shares of Coforge surged 6.64% to Rs 1,630.20 in Tuesday's trading session after the IT services firm reported a strong Q1FY27 performance. Net profit jumped 63% YoY, while revenue grew 49%, reflecting strong business momentum and improved operational efficiency. However, profit declined 15% sequentially compared with the previous quarter due to quarterly fluctuations. Coforge reported revenue from operations of Rs 5,527.7 crore for the quarter ended June 2026, registering a growth of 24% quarter-on-quarter (QoQ) and 49% YoY. The company had reported revenue of Rs 4,450.4 crore in March 2026 and Rs 3,704.4 crore in June 2025. The strong revenue performance was supported by healthy demand across geographies, new deal wins, and continued momentum in AI-led engineering, cloud, and data services. The company posted a consolidated net profit of Rs 518.6 crore in Q1FY27, down 15% from Rs 612.3 crore in the March 2026 quarter. On a yearly basis, however, profit increased significantly by 63% compared with Rs 317.4 crore reported in the same quarter last year. Profitability improvement was reflected in strong margin expansion during the quarter. Coforge reported EBITDA of Rs 1,123.3 crore ($120.3 million), marking a 74% YoY growth in rupee terms and a 55% increase in dollar terms. EBITDA margin expanded to 20.3%, improving by 285 basis points compared with the year-ago period. EBIT stood at Rs 882.2 crore ($94.5 million), rising 101% YoY in rupee terms and 80% in dollar terms. EBIT margin improved to 16%, expanding by 414 basis points YoY. Record order book strengthens growth outlookThe company reported a strong order intake of $691 million in total contract value (TCV) during the quarter. Coforge's executable order book for the next 12 months stood at $2.23 billion, increasing 27% QoQ and 44% YoY, providing strong revenue visibility for the coming quarters. During the quarter, the company secured four large deals across North America, Europe, and Latin America, further strengthening its global growth pipeline. AI-Led Services Drive GrowthCoforge highlighted that 86% of its revenues are now generated from AI-led engineering, data, and cloud services. The company said AI adoption across client delivery and internal operations has contributed significantly to margin expansion and business growth. Commenting on the performance, Sudhir Singh, Chief Executive Officer and Executive Director of Coforge Ltd, said: "Q1 performance reflects the strength of our differentiated capabilities and execution intensity. With a next twelve-month signed order book of $2.23 billion, a strong large deal pipeline, and 86% of revenues coming from AI-led engineering, data, and cloud services, we are positioned to remain among the industry growth leaders." He added that the operational integration of Encora has been completed and that strong demand, record visibility, and expanding AI-led opportunities are expected to make FY27 a strong year for the company. Dividend AnnouncementThe company's Board has recommended an interim dividend of Rs 4 per share. The record date for determining eligible shareholders for the dividend payout has been fixed as August 3, 2026. Stock Performance and Technical Outlook Coforge shares have gained around 27% in the last three months. The company currently commands a market capitalization of approximately Rs 67,660 crore. The stock's 52-week high stands at Rs 1,989.70. From a technical perspective, the stock's 14-day Relative Strength Index (RSI) stands at 57.3. An RSI below 30 generally indicates oversold conditions, while a reading above 70 suggests overbought levels. The stock is currently trading with bullish moving average indicators, suggesting positive momentum. With strong order visibility, expanding margins, AI-driven growth opportunities, and improving operational efficiency, Coforge remains positioned as one of the key players benefiting from the ongoing digital transformation and enterprise AI adoption cycle. (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)