Record order book drives long-term upside; near-term margins pressured by integration

₹5527.7 Cr delivered (+49.9% YoY); organic CC growth 1.1% reported, 5.2% ex-India govt/data center exits

Consolidated EBIT 16.0% confirmed; standalone Coforge 16.7%; but Q1 includes only 2 months Encora ($100.7M revenue at 19.1% EBIT)

Delivered PAT growth 49.2% YoY; NPM 9.6% vs likely ~6.5% prior year (implied 300+ bps expansion, not 271). Management's 110% figure appears standalone/adjusted; consolidated delivered is 49.2%

Order book confirmed at $2.23B vs $1.55B year ago; 4 large deals signed substantiated (e.g., $158M deal ramped, $230M deal announced for Q2)

Encora G&A reduced from 10% to 6.6% combined (40% reduction confirmed); all 45 legal entities migrated to SAP S/4HANA by May 1; delivered 19.1% EBIT vs expected margin accretion

Prior FY26 guidance expected order book +30%; delivered $2.23B is +44% YoY vs $1.55B year ago. Four large deals signed in Q1 + $230M deal announced; deal momentum exceeding expectations.

Prior guidance 15.5% consolidated FY27 EBIT; Q1 delivered 16.0% (40 bps ahead). Standalone Coforge 16.7% (vs 16.5-17% guidance range, at top end). But diluted by Encora 2-month contribution and integration costs.

Prior guidance expected Encora margin accretion by Q3; delivered 40% G&A cost reduction by Q1, 19.1% EBIT within 2 months, ahead of integration playbook. System migrations (SAP S/4HANA) completed by May 1.

Prior guidance 'exceptional' FY27 growth; Q1 delivered 49.2% PAT YoY growth (strong), but QoQ declined 20.2% due to $24M one-time/integration costs. Normalized for comparability, underlying growth solid but not exceptional near-term.

Prior Encora announcement indicated 80% AI-led revenue (Engineering, Data, Cloud); delivered 86% in Q1, driven by Encora's 100% engineering mix (no cloud revenues). Mix quality higher than guided.

$691M is standalone Coforge organic only (excludes Encora). UK framework agreements still not included; will sit on top of reported order intake. $230M deal (announced post-call) also not in this number.

Q2 will be robust; many deals already closed in first month; ramps mostly start Q3+. Expected sequential 5.2% CC growth in Q1 ex-closures; Q2 should be very robust despite most ramp benefit delayed.

Nuuron is operating layer, not standalone platform. 30% of active engagements infused with AI assets. 86% revenue is AI-led (Engineering, Cloud, Data). 6-7% of revenue from outcome-based contracts. Cannot isolate platform-only revenue; blended into service lines.

Solution-led selling doesn't warrant price discounting. Targeting industry-leading growth (third-year running) AND highest margin mid-cap simultaneously; both possible. Standalone Coforge 16.7% EBIT, consolidated 16%.

Smart enterprises avoiding lock-in to single LLM/cloud; moving to sovereign/open AI. Service offerings around token ops, security partnerships (Zscaler Guardian AI). Our edge is applied AI in complex domains, not model ownership. Context > models.

One Encora client already in top 10 (scalable to $50M+ in 12-18 months). Two accounts in 11-20 range (e.g., Travel portfolio, can scale rapidly). Execution discipline and cross-selling will drive scaling.

G&A down as % of revenue (6.6% combined vs 6.7% Coforge + 10% Encora). Absolute increase due to Encora consolidation; 40% Encora G&A reduction already achieved. Further reduction expected in Q2.

Structurally improved FCF trajectory over 2-3 years (H1 historically near zero; now strong). Confident trend will continue; targeting 100%+ FCF-PAT for FY27.

Absolute increase is Encora consolidation; days have actually come down. No structural working capital deterioration.

Three models: (1) legacy modernization on risk basis (lower effort revenue, supernormal post-success profits via Forge-X/Nuuron); (2) subscription model for Mod Squads (monthly, flex FTEs/agents); (3) tech/business outcome-tied models. 6-7% of revenue.

Only 2-month Encora data ($100.2M revenue); order intake was robust, pipeline robust. Not enough data to divvy separately. Margins already indistinguishable (40% G&A cut). Revenue growth indistinguishable by Q3 (not 4 quarters; 2 quarters).

Q1 delivered 49.9% YoY revenue growth. Order book significantly ahead of 30% prior expectation. Four large deals signed Q1, $230M deal announced Q2. Large deal ramps Q2-Q3 expected to drive full-year momentum

Standalone Coforge 16.5-17% (Q1 at 16.7%); Encora 19.1% EBIT (Q1, 2 months). Guidance reaffirmed despite one-time integration costs ($6.5M Q1) and hedge impacts ($24M). Encora synergies delivering; G&A now 6.6% combined

Guidance consistent with prior call. Q1 impacted by $40M/year intangible amortization (customer relationship intangibles from Encora $480M amortized 12yr). Margin sustainable if deal ramps and cost normalization execute

Q1 delivered 95.3% FCF-PAT conversion (vs -56.5% prior year). Structural WC improvement targeting 100%+ for FY27. No major capex requirements flagged; asset-light model maintained

Four large Q1 deals + $230M Q2 deal (largest announced) ramps 'just initiated.' Revenue depends on FTE deployment pace, customer acceptance, and transition milestones. If ramps slip or require higher delivery costs, revenue misses and margin compression risk

Q1 PAT declined 20.2% QoQ despite 24.2% revenue growth due to $24M one-time/integration costs ($6.5M acquisition, $10M hedge loss, $14M MTM loss to be realized Q2-Q3). Intangible amortization ($40M/year permanent) and finance costs on $550M term loan (2.99% post-tax) will persist. If normalization slows or deal margin profiles underperform, 15.5% EBIT guidance at risk

Encora delivered 19.1% EBIT in Q1 (2-month window May-June); likely captured higher-margin ramp and seasonal tailwinds. Full-quarter and annual run-rate unknown. If Encora normalized margins drop to 16-17% (near consolidated target), blended margin upside diminishes. Also, $480M customer relationship intangibles ($40M/year amortization) will drag reported EBIT

Organic CC sequential growth only 1.1% reported (5.2% ex-India govt/data center exits). This is below company's historical 20%+ CAGR and below 'robust growth' rhetoric. Suggests base business softness; reliance on large deal ramps to drive FY27 growth. If deal ramps compress or discretionary spending weakens industry-wide, full-year growth guidance at risk

Management has guided 'exceptional' FY27 growth and 'highest margin mid-cap' positioning, implying premium valuation expectations. However, delivered results show PAT growth (49.2% YoY) lagging revenue growth (49.9% YoY) and QoQ PAT declining 20.2%, signaling near-term margin pressure. If large deal ramps disappoint or one-time costs persist longer than guided, multiple compression risk