Coforge margin eases sequentially despite 49.86% YoY revenue growth
Costs grew faster QoQ and tax normalised, but operating margin remained above the IT peer median.
Filed 28 Jul 2026, 01:37 IST · Coforge Ltd (COFORGE)
Key takeaways
- Consolidated revenue grew +49.86% YoY while expenses rose +43.65%, lifting operating margin by 3.50 percentage points to 19.14%.
- QoQ, expenses grew +25.07% against revenue growth of +24.21%, reducing margin by 0.55 percentage points and net profit by -20.19%.
- Operating margin was 0.43 percentage points above the median of 15 IT peers, although other income contributed -4.02% of pre-tax profit.
Price around the results
Revenue growth stayed rapid, but sequential momentum brought cost pressure
On a consolidated basis, revenue grew +49.86% YoY, with expenses rising more slowly at +43.65%; this expanded operating margin by 3.50 percentage points. The sequential picture was less favourable: expenses increased +25.07% against revenue growth of +24.21%, trimming margin by 0.55 percentage points. Margin nevertheless remained at 19.14%, close to the previous quarter's 19.69%.
Tax normalisation and higher interest reduced profit conversion
Net profit fell -20.19% QoQ even as pre-tax profit grew +12.34%, mainly because the tax rate rose 30.86 percentage points from the previous quarter's negative rate. Interest expense increased +116.5% QoQ, adding to the drag on earnings. YoY, net profit growth of +49.19% lagged pre-tax profit growth of +92.15% as the tax rate rose 2.60 percentage points and interest increased +87.45%.
Margin direction remains improved year on year despite the latest dip
Operating margin has risen from 15.45% in Q4FY25 to 19.69% in Q4FY26 before easing to 19.14% in Q1FY27, so the latest decline is sequential rather than a prolonged deterioration. Among 15 Information Technology peers that have reported, Coforge's margin was 0.43 percentage points above the 18.71% median.
Past result reactions were usually positive, but this move is not yet known
Across eight previous result reactions, the stock rose six times and fell twice, with a median absolute move of 3.04%. The current results do not yet have a reported market reaction, so they cannot be classified as ordinary or unusual against that history.
Q1FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹5,528 cr | ₹4,450 cr | +24.21% | +49.86% |
| Other income | ₹-28 cr | ₹-32 cr | +10.48% | -354.84% |
| Expenses | ₹4,470 cr | ₹3,574 cr | +25.07% | +43.65% |
| Operating profit | ₹1,058 cr | ₹877 cr | +20.71% | +83.36% |
| Operating margin (%) | 19.14% | 19.69% | — | — |
| Interest | ₹87 cr | ₹40 cr | +116.50% | +87.45% |
| Depreciation | ₹241 cr | ₹180 cr | +33.94% | +51.44% |
| Profit before tax | ₹702 cr | ₹625 cr | +12.34% | +92.15% |
| Tax | ₹170 cr | ₹-41 cr | — | +115.15% |
| Net profit | ₹532 cr | ₹666 cr | -20.19% | +49.19% |
| EPS (₹) | ₹12.34 | ₹18.23 | -32.31% | +30.31% |
Operating margin of 19.14% compares with a Information Technology sector median of 18.71% across 15 peers that have reported Q1FY27.
What to watch
- Whether operating margin holds above 19.14% after the 0.55-point QoQ decline.
- Whether expenses grow slower than revenue after rising +25.07% versus +24.21% QoQ.
- Whether interest growth moderates from +116.5% QoQ and the tax rate moves from 24.27%.