1:5 Stock Split: IT stock jumps over 10% after board approves share split

The shares of the information technology (IT) solutions provider gained up to 10 percent after the company’s board approved a stock split in the ratio of 1:5 and a strategic acquisition. 

Price movement

With a market capitalization of Rs 52,631.47 crore, the shares of Coforge Ltd were trading at Rs 7870.35 per share, increasing around 9 percent as compared to the previous closing price of Rs 7,204.10 apiece.

Reason for Rise

As per recent company filing, Coforge Ltd’s board approved a stock split in the ratio of 1:5 which means existing 1 equity share having face value of Rs. 10 each will be split into 5 equity shares having face value of Rs. 2 each, fully paid-up.

Additionally, Coforge, through its wholly owned subsidiary Coforge Inc., will acquire Rythmos Inc. for $30 million, pending closing conditions. Additionally, its step-down subsidiary Coforge Technologies Australia Pty Ltd will acquire TMLabs Pty Ltd for AUD 20 million, subject to the completion of closing requirements.

Financial analysis

Recently, the company reported positive results in Q3FY25, revenue increased by 8 percent on a quarter-on-quarter basis from Rs. 3,062 crore in Q2FY25 to Rs 3,318 crore in Q3FY25. Further, revenue zoomed by 42 percent year on year, from Rs 2,323 crore in Q3FY24 to Rs. 3,318 crore in Q3FY25.

The company’s net profit increased by 14 percent on a quarter-on-quarter basis, from Rs. 234 crore in Q2FY25 to Rs. 256 crore in Q3FY25. Further, net profit magnified significantly by 10 percent year on year from Rs 243 crore in Q3FY24 to Rs. 256 crore in Q3FY25.

Also read: PSU stock trading at discount of 41% to buy now for an upside of more than 30%

Recent Acquisition 

Coforge has signed an agreement to acquire Xceltrait Inc. for $17.85 million. Xceltrait, a US-based company, specializes in implementing ServiceNow’s Financial Services Operations (FSO) and Customer Service Management (CSM) modules, bringing valuable expertise in the Property & Casualty (P&C) insurance industry to Coforge.

Recently, Coforge Ltd’s board approved the scheme of amalgamation of Cigniti Technologies with the company. Currently, Coforge holds 54 percent of Cigniti’s expanded share capital. Moreover, 1 equity share of the Transferee Company of Rs 10 each is fully paid up for every 5 equity shares of the Transferor Company of Rs 10 each fully paid up.

Order Intake & Future Growth

The company secured a $501 million order intake in Q3, marking two consecutive quarters above half a billion. With a strong pipeline of large deals and a 40 percent Y-O-Y order book growth, it remains confident in sustained growth, backed by a strong workforce.

AI and GenAI Initiatives

The company expanded its AI portfolio to 30+ capabilities, enhancing productivity across sectors. It continues investing in workforce upskilling, with 95% certified in AI tools, ensuring expertise in advanced AI technologies. These initiatives drive innovation and efficiency, strengthening client solutions and industry leadership..

Management Commentary

The management maintains an optimistic outlook for sustained growth, driven by strong execution and diverse growth vectors across geographies and service lines. With a strategic focus on expansion and operational excellence, they anticipate continued momentum, leveraging market opportunities to enhance profitability and long-term success.

Company Snapshot

Coforge Limited is an India-based information technology (IT) solutions provider. It specializes in application development and maintenance, managed services, cloud computing, and business process outsourcing. The Company offers computer programming consulting and related services.

Written by Abhishek Singh

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