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.

The stock went into the print at ₹1,900.5, up 5.4% over the past month of trading.

For context: this is the second-highest quarterly PAT of the last 6 quarters; revenue is at a 6-quarter high.

Net exceptional charge of ₹55.7 Cr this quarter — ₹62.7 Cr Encora acquisition/integration costs, net of ₹7.0 Cr legal-cost recovery in a cyber-security litigation matter

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.