Coforge Q1 FY27 Earnings Call: EBIT Margin Surpasses FY27 Target, Order Book at Record $2.23B

Coforge Ltd held its Q1 FY27 earnings call on July 27, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Headline Numbers & Key Metrics

• $592.2M consolidated revenue — Q1 FY 2026-2027 reported revenue includes two months of Enkora; organic constant-currency growth of 1.2% QoQ (or 5.2% excluding culled businesses) and 33.3% YoY.
• 16.0% consolidated EBIT margin — Already exceeded the full-year FY 2026-2027 guidance of 15.5%; standalone Coforge EBIT margin at 16.7% and Enkora delivered 20.3% EBITDA margin in its first post-acquisition quarter.
• Rs.13.30 EPS (excl. one-time costs) — Down from Rs.13.80 in the prior quarter, impacted by 25% equity dilution from the Enkora acquisition and incremental interest; management remains on track for EPS accretion in FY 2026-2027.
• 46,228 headcount — Net addition of +10,451 (including 9,256 from Enkora); organic net addition of 1,195; attrition at 10.4%, among the lowest in the industry.
• $52.9M free cash flow — Representing 95.3% FCF-to-PAT conversion in Q1 FY 2026-2027, a structural improvement from negative 56.5% in Q1 FY 2025-2026; management confident of exceeding 100% for the full year.

Deal Wins, Pipeline & Client Momentum

• $691M fresh order intake — Organic (excl. Enquero) in Q1 FY 2026-2027; next 12-month executable order book at an all-time high of $2.23B, up 44.2% YoY.
• $158M deal fully ramped — Announced in April Q1 FY 2026-2027, now with over 300 FTEs deployed; the $230M+ deal signed in the last week of Q1 FY 2026-2027 is a multi-year digital modernization program, adding 20-30 more teams.
• Q2 FY 2026-2027 expected to be "robust" — Management noted large deals already closed in the first month of Q2, with most revenue impact starting from Q3 FY 2026-2027 onwards; the UK framework agreement announced last quarter is not yet in order intake.
• Client concentration — One client >$100M, three clients $50-100M, and 14 clients $20-50M in Q1 FY 2026-2027; top 5 clients represent 18% of revenue, top 10 at 26.1%.
• Enkora client enters top 10 — Management plans to develop this into a $50M+ account within 12-18 months; cost synergies at 40% with combined EBIT of 16%.

AI-Led Differentiation & Platform Outcomes

• 86% of Q1 FY27 revenue — From AI-led engineering (50%), data (21%), and cloud (15%) services; 30% of active delivery projects driven by Coforge's AI assets, with 11,000+ data & AI practitioners.
• Measurable productivity gains — 30%+ for a wealth management advisor platform (20 specialized agents), 30% for a travel technology client (ModSquad model), and 65% for a specialty insurance provider via CodeInsight AI migration to Azure.
• CodeInsight AI accuracy — Reduced technical debt by 92% with 99.93% field-level accuracy for a large specialty insurer; an agentic audit platform identified $4M in savings at 95% accuracy for a biopharmaceutical company.
• $58M cumulative AI investment — As of Q1 FY 2026-2027, with 8 AI platforms, 22 AI assets, and over 100 reusable AI agents/accelerators; the firm views agentic AI as creating a high-margin managed services layer.
• Industry recognition — Coforge named a leader and star performer in Everest Group's Insurance Services Peak Matrix 2026 and a leader in ISG Provider Lens Insurance Services ecosystem assessment.
• Enterprise sovereign AI trend — Management noted clients are not tying themselves to specific LLM models, instead focusing on in-house data processing for security and governance; no current work with North American, UK, or European clients actively using Chinese LLM models.

Cost Synergies, Wage Outlook & Capital Structure

• Combined SG&A at 6.6% — In Q1 FY 2026-2027, down from Enkora's 10% at acquisition, reflecting a 40% reduction in Enkora SG&A G&A cost synergies already achieved, with revenue growth synergy expected to be indistinguishable from Q3 FY 2026-2027.
• No broad-based wage hikes — For FY 2026-2027, any potential hikes are uncertain and not expected before Q4 FY 2026-2027 at the earliest, per management.
• Hedge losses of $10M — Incurred in Q1 FY 2026-2027; mark-to-market loss of $14M on outstanding hedges to be realized over the next two quarters; from Q4 FY 2026-2027, management expects a positive earnings impact of $10M as hedge losses are eliminated.
• $550M term loan — Drawn at 2.99% post-tax interest (fixed 4.6%, 30 bps above 3-year SOFR); repayment schedule: $59M in FY 2026-2027, $209M in FY 2027-2028, $258M in FY 2028-2029, and $75M in Q1 FY 2029-2030; no restrictive covenants.
• Exceptional expenses of $6.5M — Recognized in Q1 FY 2026-2027 against a guided $15M total; well within budget with only marginal cost expected in Q2.
• Rest of world segment margin flat — In Q1 FY 2026-2027 due to reduction in higher-margin India government and data center businesses plus consolidation of InCora; CEO expects margins to expand from here.

Guidance, Outlook & Strategic Positioning

• FY 2026-2027 guidance reiterated — Consolidated EBITDA margin of 20.5% to 21%, standalone EBIT margin of 16.5% to 17%, and consolidated EBIT margin of 15.5% or higher; management is confident of delivering and surpassing the consolidated EBIT target.
• FCF to PAT exceeding 100% — Expected for FY 2026-2027; management confident of building on the structural improvement in cash flow seen in Q1.
• Industry growth benchmark — Management stated the firm will set the revenue growth benchmark for the industry for the third consecutive year in FY 2026-2027, while aspiring to be the highest-margin mid-cap IT firm.
• India government run-down complete — The $50M reduction (FY 2025-2026) included a $15M decline in Q1 FY 2026-2027; the remaining $35M is now part of the base with no further reduction expected.
• Industry deflationary pressure noted — CEO cited legacy system modernization, AI data foundation, cloud scalability, and security as near-term opportunities, with more agent-based solutions in the medium term.
• Outcome-based contracts at 6-7% — Of global revenue on a run-rate basis in Q1 FY 2026-2027, with three pricing models: legacy modernization risk/reward, monthly subscription for CoForge mod squads (130+ agents), and business/technology outcome-based models.

Vertical-Wise & Regional Breakdown

• Healthcare/High-Tech led vertical growth — Organic CC growth of 11.6% in Q1 FY 2026-2027, followed by Insurance at 4.6%, BFS at 2.9%, and Travel at 1.7%; all verticals and UK public sector showed strong growth.
• Europe grew 8.4% — Organic CC in Q1 FY 2026-2027, while Americas grew 3.5%; Rest of World (incl. India) declined 22% reflecting planned portfolio exits.
• Government (India) declined 8% — In Q1 FY 2026-2027 due to planned portfolio exits; the $15M reduction in Q1 was part of the $50M full-year FY 2025-2026 run-down, with the remaining $35M now in the base.
• Cloud revenue grew 4% QoQ — In Q1 FY 2026-2027, but percentage contribution declined ~2.7-2.8% due to the Enkora merger (largely engineering) and classification shifts; AI-led engineering contribution increased by 5%.
• Core business grew 5.2% QoQ — Excluding divestitures in Q1 FY 2026-2027, with management describing growth as robust; CEO noted performance has been materially superior to the industry for nine years (FY 2017-2018 through FY 2026-2027).