Coforge spend tests investors

Coforge Ltd’s shares have now recouped a large part of their losses seen after its Q1FY26 results were announced, when the stock had tanked 9.4% in a single day. Investor concerns were mainly pertaining to the company’s heavy capex and profitability falling short of expectations, even as revenue growth was splendid at 8% sequentially in constant currency (CC) terms.

- Pallavi Pengonda [e-mail]

Notably, the mid-sized information technology (IT) firm clocked an enviable 32% year-on-year (yo-y) CC revenue growth in FY25, aided by acquisitions; organic revenue growth was strong at 15%. FY25 capex surged 114% year-on-year to ₹3537 crore. Capex as a percentage of revenue was 4.6% in FY25 versus 1.7% in FY20. The capex increase can be largely attributed to the Cigniti acquisition and investment in a datacentre for a client. Q1FY26 capex was high too, but is expected to taper ahead.