Coforge share price jumps over 7%; why is the stock gaining traction?

The NIFTY IT index, in the intraday session, jumped as much as 4.14% to the day's high of 29,566.15 levels, with all ten constituents in the green. However, Coforge was the biggest gainer on the index.

Why is the Coforge stock trading with sharp gains?

Shares of Coforge witnessed strong buying interest after leading financial services firm CLSA maintained its positive stance on the stock. The investment firm said it continues to remain positive on the company’s management execution and noted that better-than-estimated FY27 margin guidance following the Encora consolidation has improved investor confidence.

CLSA also highlighted that Coforge’s decision to exit a low-margin government project helped improve its free cash flow-to-profit conversion guidance.

Further, analysts at CLSA have raised the company's FY27 and FY28 earnings estimates by 9% and 5%, respectively, while noting that Coforge could emerge as a key beneficiary of the ongoing AI cycle, supported by its strong order book, improving revenue per employee, and margin expansion.

What Coforge's CEO said recently

Earlier this month, Coforge said even though the rapid adoption of artificial intelligence is disrupting the traditional "labour-as-a-default" model, it will not shrink the IT services industry.

Coforge reported a doubling of consolidated net profit in the March quarter at ₹612.3 crore. Revenue from operations grew 30% to ₹4,450.4 crore from ₹3,422.2 crore logged a year ago.

Chief Executive Officer and Executive Director Sudhir Singh, during the company's Q4 earnings call, said the rapid adoption of AI is disrupting the traditional "labour-as-a-default" model in the tech services industry, but it is also creating a massive new high-margin pipeline.

The CEO pointed to the "true cost of code", noting that while AI-generated code is cheap to build, it is expensive to maintain, secure, and own.

"Just like cloud migration 20 years back, agent AI will also create a massive managed services line. Once these systems are in production, someone has to monitor the models, retrain the agents, and ensure governance," Singh explained.

Singh noted that macroeconomic tailwinds on the demand side are "structural and pure", driven by a near-term modernisation surge and a medium-term AI agent deployment wave.

"While investors are concerned about the impact of AI on tech services, we believe AI is rapidly creating new value pools for the industry and unlocking a $160-180 billion market opportunity growing at 35% to hit $800 billion in the next 5 years," Coforge said in the investor presentation.

AI-led efficiencies provide a path for further margin expansion in FY27, Coforge said.

Other key details

The company, which made AI investments worth $5.5 million in FY26, said AI is acting as a lever for both revenue growth and margin expansion, reflected in a strong share of AI-attributed revenue and rapid growth in AI Total Contract Value (TCV) bookings.

In the full fiscal year FY26, Coforge's net profit almost doubled to ₹1,555.7 crore as compared to FY25, primarily due to gains from the sale of a stake in Coforge Advantage Go in May 2025.

Revenue from operations stood 35.8% higher at ₹16,402.7 crore during the fiscal year.

"With an order executable of $1.75 billion, we enter FY27 with strong momentum and confidence. We expect to deliver robust revenue growth in FY27 and plan to deliver an EBITDA of more than 20.5% on a consolidated basis in FY27," Singh said.

Encora deal update

In April 2026, Coforge said it had completed the acquisition of Silicon Valley-based AI firm Encora for an enterprise value of $2.5 billion.

To fund the transaction, Coforge has secured a three-year loan facility of $550 million at a fixed interest rate of 4.6%. Consequently, the firm has cancelled all previous plans to raise capital through a qualified institutional placement (QIP), the company said in a regulatory filing on Thursday.

The $550-million syndicated loan facility is backed by a consortium of major global lenders, including JPMorgan Chase Bank, Bank of America, Citibank, HSBC, and BNP Paribas.

Repayment of the loan will commence six months from the drawdown.

As part of the acquisition, announced in December 2025, Coforge's board approved the allotment of over 9.37 crore equity shares on a preferential basis to Encora sellers - Encora Holdco Limited and AI Altius Parent (Cayman) Limited. The shares were allotted at an issue price of ₹1,815.91 per share.

The financial consolidation of Encora into Coforge took effect from May 1, 2026.

What the company said

"Coforge FY27 results will reflect eleven months of impact from Encora operations. The firm is pleased to share that the integration activities related to Encora's integration into Coforge are ahead of plan, with the combined cost synergies on G&A expected to be between 20% and 25%," the company said.

All Encora leaders whom the firm wished to retain have accepted roles within the new composite structure that has been rolled out with immediate effect, the company added.