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    Coforge Q1 FY27 earnings call

    COFORGE
    Information Technology·28 Jul 2026
    Management Summary

    Coforge delivered a strong Q1 FY27, with robust revenue growth and significant EBIT margin expansion, driven by successful Encora integration and strong deal wins. The company's AI-led strategy continues to gain traction, contributing 86% to revenue. Despite some one-time hedge losses, the outlook for FY27 remains positive with unchanged margin and FCF guidance.

    Highlights

    5

    • Consolidated revenue stood at US$592.2 million, reflecting a 49% YoY growth.

    • Consolidated EBIT margin reached 16.0% in Q1 FY27, a significant expansion of 414 bps YoY, surpassing the FY27 guidance of 15.5%.

    • The next 12-month executable order book hit an all-time high of US$2.23 billion, marking a 44.2% YoY increase from US$1.55 billion.

    • Encora integration is ahead of schedule, with 40% G&A cost reduction achieved, leading to a combined G&A of 6.6% for Q1 FY27.

    • Free cash flow for the quarter was US$52.9 million, resulting in a strong FCF-to-PAT conversion of 95.3%, compared to -56.5% in the prior year.

    Concerns

    2

    • The company incurred hedge losses of US$10 million and a Mark-to-Market (MTM) loss of US$14 million on outstanding hedges, impacting current quarter earnings.

    • The Rest of the World segment contracted 22.0% in constant currency, reflecting the impact of planned portfolio exits (data center and India government business).

    Key financials

    Single quarter

    18 metrics
    1. 01Consolidated Revenue592.2 Mn+49%YoY
    2. 02Consolidated Revenue55,277 Mn
    3. 03Consolidated EBIT—+101%YoY
    4. 04Consolidated EBIT Margin16%+4.1%YoY
    5. 05Organic EBIT Margin16.7%

    Segment breakdown

    Service Line Contribution
    50% AI-led Engineering21% Data and Integration15% Cloud7% Intelligent Automation7% Business Process Management86% AI-led Engineering, Data, Integration, Cloud (Total)
    Vertical Organic CC Sequential Growth
    0.029 sequential_cc_growth Banking and Financial Services Growth24.7% Banking and Financial Services Revenue Share0.046 sequential_cc_growth Insurance Growth13.6% Insurance Revenue Share0.017 sequential_cc_growth Travel, Transportation and Hospitality Growth21.3% Travel, Transportation and Hospitality Revenue Share0.116 sequential_cc_growth Healthcare and Hi-Tech Growth17.3% Healthcare and Hi-Tech Revenue Share-0.08 sequential_cc_growth Government Outside India Growth6% Government Outside India Revenue Share
    Geographic Organic CC Sequential Growth
    0.084 sequential_cc_growth EMEA Growth0.035 sequential_cc_growth Americas Growth-0.22 sequential_cc_growth Rest of the World Growth
    List

    Order Book

    high confidence

    Total Value

    USD 2.23 billion

    as of 2026-06-30

    quantified
    44.2% YoY

    Inflow this qtr

    USD 691 million

    Execution

    executable over the next 12 months

    "The order intake for Q1 was robust, and the pipeline for large deals has never been stronger. A significant AI-led transformation program was signed in Q2, which will further boost the order book."

    Source:
    Prepared remarks

    Capital allocation

    4
    high confidence
    CategoryHeadline
    Capex

    Capex disclosed

    Debt

    Gross USD 550 million

    Cost 3.0% · Maturity: 3 years

    M&A

    Encora

    acquisition · integrated

    Liquidity

    Liquidity disclosed

    Free cash flow of $52.9 million in Q1 FY27, with 95.3% FCF-to-PAT conversion.

    Guidance & targets

    7
    CategoryTargetPriority
    Profitability
    Consolidated EBITDA Margin
    20.5% to 21%
    		High
    Profitability
    Standalone EBIT Margins
    16.5% to 17%
    		High
    Profitability
    Consolidated EBIT Margins
    15.5% or higher
    		High
    Cash Flow
    FCF to PAT Conversion
    100%+
    		High
    Integration Costs
    Encora Integration Costs
    Marginal in Q2, none from Q3 onwards
    		High
    Earnings Impact
    Hedge Loss Elimination Impact
    Positive impact of approximately $10 million
    		High
    Client Mining
    Encora Top Client Scaling
    $50 million-plus account
    		Medium

    What to watch in Q2 FY27

    5

    Encora Integration Costs

    Q2 FY27, Q3 FY27 onwards
    Current$6.5 million in Q1 FY27
    TargetMarginal in Q2 FY27, none from Q3 FY27 onwards

    Why it matters

    Verifies the successful and cost-efficient integration of Encora, impacting profitability.

    We expect marginal integration costs in Q2 and none from Q3 onwards.

    Risks & concerns

    2
    RiskSeverity

    Hedge and Mark-to-Market Losses

    Incurred $10 million in hedge losses and $14 million in MTM losses on outstanding hedges in Q1, with MTM losses to be realized over the next two quarters. Management expects these to be eliminated from Q4 onwards. — Management acknowledged

    medium

    Impact of Portfolio Exits on Rest of World Segment

    The Rest of the World segment contracted 22.0% in constant currency due to the closure of the data center business and India government business, which were high-margin. This impact is now part of the base. — Management acknowledged

    low

    Q&A highlights

    8

    “The $691 million, Sulabh, does not include the order intake from the Encora portfolio. That is only the organic piece that has come from what used to be standalone Coforge.”

    Clarifies that the reported order intake is purely organic, indicating strong standalone performance, and that Encora's contribution would be additional.

    asked by Sulabh Govila

    2 min read6 chapters

    Detailed Narrative

    01

    Strong Q1 FY27 Financial Performance Ahead of Guidance

    Coforge reported a robust Q1 FY27, with consolidated revenue reaching US$592.2 million, marking a 49% year-over-year increase. The consolidated EBIT margin stood at an impressive 16.0%, expanding by 414 basis points YoY and already exceeding the FY27 consolidated EBIT guidance of 15.5% or higher. Organic constant currency sequential growth, excluding the impact of portfolio exits, was a healthy 5.2%.

    02

    Accelerated Encora Integration and Synergies

    The integration of Encora is progressing significantly ahead of the planned schedule, with all 45 legal entities successfully migrated to SAP S/4HANA by May 1. This rapid integration has led to exceptional cost📎 synergies, including a 40% reduction in Encora's G&A, contributing to a combined G&A of 6.6% for Q1 FY27. Encora contributed US$100.7 million to the quarter's revenue and delivered a strong EBIT margin of 19.1% within its first two months as part of Coforge.

    03

    Record Order Book and Robust Deal Pipeline

    Coforge achieved an organic order intake of US$691 million in Q1 FY27 and expanded its next 12-month executable order book to an all-time high of US$2.23 billion, representing a 44.2% year-over-year increase. The company signed four large deals in the quarter, with an additional five-year, US$230 million-plus AI-led transformation program secured in Q2, further strengthening the pipeline and providing strong revenue visibility.

    04

    Strategic Focus on AI and Enterprise Autonomy

    The firm's strategic core, comprising AI-led engineering, data and integration, and cloud services, contributed 86% of the consolidated revenue in Q1. Coforge continues to invest heavily in AI innovation, having invested US$58 million in FY26, and leverages 8 AI platforms, 22 AI assets, and over 100 reusable AI agents. This focus on 'Enterprise Autonomy' aims to operationalize AI within complex business contexts, driving future growth.

    05

    Strong Cash Flow Generation and Debt Management

    Coforge generated US$52.9 million in free cash flow during Q1 FY27, achieving a robust 95.3% FCF-to-PAT conversion, a significant improvement from the negative conversion in the prior year. The US$550 million term loan taken for the Encora acquisition carries a favorable post-tax interest cost of 2.99% per annum, with a structured repayment schedule over three years. The company is confident in achieving its FY27 FCF-to-PAT guidance of 100%+.

    06

    Outlook for Continued Growth and Margin Expansion

    Management reiterated its FY27 guidance, targeting a consolidated EBITDA margin of 20.5% to 21% and consolidated EBIT margins of 15.5% or higher. They anticipate marginal integration costs in Q2 and none from Q3 onwards, with hedge losses expected to be eliminated from Q4, contributing a positive impact of approximately US$10 million to earnings. All industry verticals and geographies are expected to drive exceptional growth.

    This is an AI-generated summary of a publicly available earnings call transcript.