Coforge Shares in Focus on Wednesday after Announcing Two Acquisitions, Stock Split
Coforge Embarks on Ambitious Acquisition Spree
Coforge Ltd, a leading technology services provider, has announced two acquisitions, marking its aggressive growth strategy in the market. The company has signed a stock purchase agreement with Rythmos Inc. and its stockholders to acquire all outstanding shares of the company, and a share sale agreement with TMLabs Pty Ltd. and its shareholders to acquire all its outstanding shares.
Rythmos Acquisition to Enhance Data Practice and Cloud Engineering Capabilities
According to the agreement, Coforge will pay an upfront consideration of $30 million to Rythmos and an additional earnout amount will be payable in two tranches based on the achievement of certain revenue and EBITDA targets for calendar year 2025 and 2026. The maximum payout earmarked for this is $18.7 million. Rythmos focuses on adding data capabilities and has industry knowledge in the airlines industry. Coforge believes that the acquisition will help enhance its data practice and cloud engineering capabilities.
TMLabs Acquisition to Strengthen Implementation Services in Australia
Coforge will also pay an upfront consideration of 20 million Australian Dollars to TMLabs to acquire the entire stake, along with an additional earnout amount based on achievement of certain milestones on the revenue and EBITDA front for financial year 2026 and 2027. TMLabs provides implementation services related to the "ServiceNow" platform and operates majorly in Australia. This acquisition will help Coforge strengthen its implementation services in Australia.
Jefferies Raises Target Price to ₹10,350 per Share
Brokerage firm Jefferies has a "buy" rating on Coforge and has raised its target price to ₹10,350 per share. The brokerage believes that the company’s largest-ever deal signing of $1.6 billion not only provides greater revenue growth visibility in FY26, but will also improve its positioning in the travel vertical and open doors to more such large deal wins in the future.
Coforge’s Fortified Positioning in the Market
The brokerage raised the company’s FY26-FY27 estimates by 3%-5%. Of the 38 analysts that have coverage on the stock, 24 have a "buy" rating, four have a "hold" rating, and 10 have a "sell" rating.
Stock Split: A New Milestone
In another significant development, Coforge’s board approved a proposal for a stock split. The company will divide one equity share that currently carries a face value of ₹10 into five equity shares, which will now have a face value of ₹2 each. This is the first stock split announced by the company. The stock split is subject to approval from the company’s shareholders and the record date for this will be intimated in due course. This entire exercise of stock split and reflection in to the demat account of shareholders is likely to be completed over the next three months.
Post-Split Share Capital
Post the stock split, Coforge will have 33.43 crore outstanding shares, compared to the pre-split figure of 6.68 crore. Coforge shares ended the previous trade session 1.93% lower at ₹7,215.2 apiece. The stock has declined 25.06% this year, so far.
Conclusion
Coforge’s announcement of two acquisitions and a stock split has sent the market in a flurry, with analysts and investors alike keenly watching the developments. With its strengthened positioning in the market, Coforge is set to accelerate its growth momentum, and the stock split is expected to bring more liquidity and attractiveness to the stock. As the company gears up for a bright future, it remains to be seen whether the market will continue to rally behind Coforge. Will the company’s ambitious plans yield results, and will the market reward its shareholders with significant returns? Only time will tell.
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