Coforge signs highest quarterly deal signing in weakest seasonal quarter

Delhi-headquartered mid-cap information technology (IT) services firm Coforge announced a record total quarterly deal value of $345 million, as net profit rose 24.2% year-on-year (YoY) on the back of the record deal signing. The company signed three large deals during the period, with one new $50 million-plus client and two new $30 million-plus clients in terms of total contract value (TCV) of the deals — out of 11 total new clients added during the period. 

The December quarter marked the fourth consecutive quarter where Coforge signed $300 million-plus deals. 

The company’s rupee revenue rose 4.9% sequentially and 24% YoY to ₹2,055.8 crore, while dollar revenue was at $251.7 million — up 3.7% sequentially and 20.7% YoY in constant currency (CC) terms. Coforge disclosed its net executable order book for the next 12 months, which refers to the TCV of deals that are presently active for the company, at $841 million. 

Coforge’s financial results are in line with the rest of the domestic IT services industry, which has seen four out of the top six companies post strong numbers. Barring Tata Consultancy Services, Infosys, HCLTech and Wipro all outperformed analyst estimates. 

Coforge also reported one of the lowest attrition levels among IT services companies, at 15.8%. Attrition fell by 60 basis points, or 0.6%, sequentially. 

As a result of its financial performance during the seasonally weak quarter, Coforge chief executive, Sudhir Singh, upgraded the company’s FY23 annual revenue growth guidance to 22%. The company also announced a dividend of ₹19 per share. 

Coforge’s December quarter performance bucks the trend of large-cap IT services firms signing smaller value deals of shorter tenures and TCVs, as against the previous trend of large deals making the headlines. However, most firms reported a resilient December quarter — for instance, Infosys disclosed a TCV of $3.3 billion in new deals, while Wipro disclosed an annual growth of over 30% in the revenue it earned from offering ‘product platforms’ to its clients. 

Product platforms refer to software-based platforms, such as those made by SAP, Microsoft or IBM — which an IT services firm leases from a software maker, and subsequently provides to clients. 

A January 13 report on the Indian IT services sector by equities research firm, BNP Paribas, said that the trend of deal signings by Indian IT firms showcase resilience and robustness across the world in terms of the demand for tech products and services. Kumar Rakesh, vice-president of equities research at BNP Paribas, said in the report that digital services, automation and cloud products were among the most in-demand services among the multiple long-tenured deals signed through the quarter. 

During the quarter, Coforge also announced a ‘Digital and Metaverse Center of Excellence Showcase’ — a virtual reality services platform for clients. 

The company’s business revenue from India, which makes for around 3.5% of its overall revenue, dropped 8.5% YoY to ₹72.9 crore.