Coforge shares rise 4% as JP Morgan goes 'overweight', sees 24% upside

Shares of Coforge Limited advanced over 4 percent in the morning trade on April 4 after JP Morgan initiated coverage of the stock with an "overweight" call, citing consistent execution in sales and operating leverage.

The global brokerage has assigned a price target of Rs 7,000, an upside of 24 percent from the last close of Rs 5,662. The stock has surged 47 percent in the last year.

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Analysts expect the Indian information technology firm to grow revenue at 13 percent over FY24-26, resulting in a 21 percent increase in earnings CAGR over the same period. "This places the company fastest among all large cap peers, and lags only Persistent Systems in our coverage," JP Morgan said in a recent note.

The company's potential placement or an extension of ESOP  suggests that if it goes ahead with the plan, it might lower profit margins and earnings per share (EPS) for the financial year 2025 (FY25) by 100 basis points.

One basis point is one-hundredth of a percentage point.

The share has dropped by over 12 percent in the past month. This could be a good time to buy the stock as the price is lower, JP Morgan said.

In January, Morgan Stanley also started coverage on the company with an "overweight" call. "The company has strong potential to be driven by strong revenue growth and strong free cash flow conversion," its analysts said.

At 9.26 am, the stock was trading at Rs 5,795 on the National Stock Exchange, up 2.34 percent from the previous close.