Coforge Q2 FY27: consolidated PAT +42% YoY on Encora; revenue, EBIT lag Street

Coforge's consolidated revenue came in at ₹6,170.8 Cr (+54.8% YoY, +11.6% QoQ) with consolidated PAT of ₹604.9 Cr (+42.2% YoY, +13.8% QoQ; owners'-attributable PAT ₹588.1 Cr). Both growth rates, while large in absolute terms, undershot the Street's bar: JM Financial's post-Q1 preview had modelled Q2 FY27 revenue/EBIT/adjusted-PAT growth of 57%/82.2%/70.4% YoY, against which actual revenue growth of 54.8% and EBIT growth of ~67.7% (₹984.7 Cr, 15.96% margin, vs an implied ~17.1% margin expectation) both fell short. Adjusted PAT — stripping the ₹55.7 Cr net exceptional charge and comparing on an owners'-attributable basis — came in near ₹642 Cr, +~70.9% YoY, essentially in line with the Street's 70.4% estimate, so the bottom line held up even as the operating print softened. The divergence between EBIT and PAT growth traces to two below-the-line items: consolidated finance costs jumped to ₹108.0 Cr from ₹40.9 Cr a year ago (borrowings swelled to ₹4,242.1 Cr non-current from near-nil, funding the April 2026 Encora acquisition), while minority-interest profit share fell to ₹16.8 Cr from ₹49.6 Cr after the company bought out additional subsidiary stakes (₹75.5 Cr spent this half). Net profit margin compressed to 9.80% from 10.57% YoY (though it ticked up from 9.57% in Q1), even as EBIT margin expanded YoY (14.62% to 15.96%) and EBITDA margin held near 20.6% — within management's own FY27 guidance band of 20.5–21% and slightly ahead of our pre-result preview's 20.0–20.3% expectation. On management's FY27 targets set out on the July concall (consolidated EBIT 15.5%+, EBITDA 20.5–21%, FCF-to-PAT 100%+), the quarter is on-track on margins (15.96% EBIT, ~20.6% EBITDA) but H1 FCF-to-PAT runs around 89% (₹1,007.2 Cr FCF on ₹1,136.6 Cr H1 PAT), still short of the 100%+ target. Standalone results tell a materially different story: standalone PAT fell to ₹210.3 Cr from ₹362.3 Cr a year ago (-42% YoY) even as revenue rose to ₹3,812.0 Cr, because the standalone entity now carries the Encora acquisition debt (finance costs up to ₹78.9 Cr from ₹14.4 Cr) and its own ₹27.4 Cr exceptional charge, without the offsetting operating contribution that shows up only at the consolidated level. Corporate developments this quarter align with the acquisition-integration theme: the Board approved Price Waterhouse Chartered Accountants as statutory auditor for FY27–32, confirmed Akhil Gupta as Chairperson following two independent-director resignations in September, and approved winding up a dormant Encora-group Italian subsidiary — all housekeeping rather than operational signals. No separate management press release accompanied this filing beyond the board-outcome letter, so there is no fresh management commentary on growth or margin trajectory to weigh against the print. Going into Q3, the comparison base still includes Encora (acquired April 23, 2026 — fully in Q1 and Q2 FY27 numbers), so the YoY growth rates investors are watching remain structurally inflated by the acquisition rather than reflecting organic execution; QoQ trends (+11.6% revenue, +13.8% PAT, flat ~16% EBIT margin) are the cleaner like-for-like read for now.