Coforge (COFORGE) Q2 25/26 earnings summary

Executive summary

• Q2 FY26 revenue reached $462.1 million (INR 39,857 million), up 31.7% YoY in INR and 26.6% YoY in USD, with EBIT margin at 14.0% and PAT at INR 3,758 million.

• Order intake was $514 million, with five large deals signed and a next-12-month executable order book at a record $1.63 billion, up 26.7% YoY.

• AI-driven transformation, including platforms like Code Insight AI and BlueSwan, is central to delivery and operational efficiency.

• Net headcount addition of 709, with attrition at 11.4%, among the lowest in the industry; utilization at 82.3%.

• Board approved unaudited results, declared an interim dividend of Rs. 4 per share, and approved voluntary winding up of two UK subsidiaries.

Financial highlights

• Q2 revenue was $462.1 million (INR 39,857 million), up 4.5% QoQ in USD and 8.1% QoQ in INR.

• EBIT margin improved to 14.0%, up 251 bps QoQ and 240 bps YoY; PAT margin at 9.4%, up from 8.6% in Q1 FY26.

• Consolidated net profit for Q2 FY26 was Rs. 4,254 million; EPS for Q2 was INR 11.2 (basic Rs. 11.21, diluted Rs. 11.07).

• Free cash flow rose to $37 million, with FCF to PAT ratio at 86%.

• Billed DSO at 63 days, unbilled at 26, and contract assets at 15, totaling a 104-day working capital cycle.

Outlook and guidance

• Management targets at least 14% EBIT margin for FY26 and beyond, prioritizing growth over further margin expansion.

• Free cash flow to PAT expected to sustain at 70%-80% going forward.

• Robust growth expected in H2, with Q4 traditionally being the strongest quarter.

• Wage hikes effective October 1 may impact Q3 margins by 100-150 bps, but offsetting levers are in place.

• Board notes results are not comparable YoY due to acquisitions and divestitures.