India's Coforge beats second-quarter profit view on improved client spending

(Reuters) -Indian IT services firm Coforge reported a better-than-expected 86% surge in second-quarter profit as client spending picked up across the sector. Consolidated net profit rose to 3.76 billion rupees in the quarter ended Sept. 30, above analysts' average expectation of 3.71 billion rupees, according to data compiled by LSEG. Revenue rose 31.7% to 39.86 billion rupees ($453.50 million), largely in line with analysts' estimate of 40.33 billion rupees. However, Coforge's deal wins for the quarter were marginally lower at $514 million from $516 million last year. KEY CONTEXT Coforge's results come as larger rivals Tata Consultancy Services, Infosys and Wipro beat estimates for quarterly revenue and expect to see improving demand in the second half of the fiscal year. Strong deal wins and clients' growing willingness to invest in AI projects are seen as key drivers for the industry. Analysts also attributed realisations from Coforge's $1.5 billion deal with U.S. client Sabre as a significant factor. PEER COMPARISON Valuation Estimates (next 12 Analysts' sentiment (next 12 months) months) RIC PE EV/EBI Revenue Profit Mean # of Stock to Div TDA growth(%) growth(%) rating* analysts price yield target** (%) Coforge 35.97 19.38 23.88 42.63 Buy 32 0.93 0.89 Persistent 44.45 29.93 19.01 23.90 Hold 36 0.97 0.61 Systems Mphasis 25.20 15.94 10.87 12.27 Buy 35 0.91 2.12 Tech Mahindra 21.62 14.16 5.88 24.21 Hold 42 0.93 3.11 * Mean of analysts' ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell** Ratio of the stock's last close to analysts' mean price target; a ratio above 1 means the stock is trading above the PT JULY-SEPT STOCK PERFORMANCE ($1 = 87.8950 Indian rupees) (Reporting by Aleef Jahan and Sai Ishwarbharath B; Editing by Ronojoy Mazumdar and Janane Venkatraman)

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