COFORGE.NS Stock Today, December 27: $550m QIP, Encora Deal Signed
Coforge share price was steady around ₹1,738 on December 27 after the board approved a $550 million QIP and signed a definitive agreement to acquire Encora. The move aims to scale digital engineering and push toward a $2 billion revenue run rate. Investors in COFORGE.NS are weighing dilution, funding mix, and integration execution. We break down today’s price action, the equity raise math, margin implications, and what to track next.
QIP and Encora: what changed today
The board cleared fundraising via a $550 million qualified institutional placement, with flexibility to also use a preferential issue, as covered by CNBC-TV18. The stated goal is to strengthen the balance sheet and fund growth. Final pricing will be set by the bookbuild. Management also indicated multiple funding options, keeping leverage within a comfortable zone.
Coforge signed a definitive agreement to acquire Encora, a digital engineering firm with strong US presence. As noted by Moneycontrol, the deal size discussed earlier was “$1 billion plus.” Closing will be subject to customary approvals. The tie-up should add product engineering depth across healthcare, BFSI, and tech clients.
Leadership continues to guide toward a $2 billion revenue run-rate over coming quarters, with Encora expected to accelerate that plan. Cross-sell potential, near-shore delivery, and higher value engineering work are key levers. Execution will hinge on client retention, pricing discipline, and maintaining onsite-offshore mix while protecting margins.
Impact on valuation and dilution
For illustration, at 1 USD = ₹83, the $550 million QIP equals about ₹4,565 crore. If priced near today’s ₹1,738, it implies roughly 26 million new shares, or about 8 percent dilution versus 334.8 million shares outstanding. Actual dilution will vary based on final issue price and the eventual funding mix.
Coforge trades at a PE of 51.5 on EPS of ₹32.49, so earnings delivery matters. Encora integration that lifts margins and utilization could offset dilution. Any slippage in project ramp-ups or higher retention bonuses could compress near-term EPS. Watch deal-related amortization and one-time costs that may affect reported earnings.
Key ratios look comfortable, with net debt to EBITDA near 0.20x and interest coverage around 30x. The QIP supports a prudent capital stack while preserving headroom for integration costs. Working capital remains a watch item with DSO around 87 days and a 35-day cash conversion cycle, making collections and billing discipline important.
What the market is pricing in
Coforge share price hovered near ₹1,737.7 today, intraday high ₹1,781 and low ₹1,732. The 50-day average is ₹1,823.7 and the 200-day is ₹1,710.1. RSI near 36 suggests weak momentum, with CCI and Williams %R in oversold territory. This setup often needs a catalyst, such as clarity on pricing, accretion timeline, or early client wins.
Recent weakness reflected dilution worries and cash-conversion concerns highlighted by market commentary. The definitive Encora signing reduces uncertainty on target selection. Investors now seek specifics on synergy capture, cross-sell pipeline, and whether the equity raise fully funds the plan or is paired with debt. Transparent communication can narrow the sentiment gap.
On the upside, the 50-DMA near ₹1,824 is the first hurdle, followed by ₹1,875 to ₹1,900. Supports sit around ₹1,760 to ₹1,740 based on Bollinger and Keltner lower bands. A decisive close back above the 50-DMA would signal improving risk appetite. Failure to hold ₹1,740 could invite a retest of recent swing lows.
What to track next
We will track leadership continuity, top 20 client retention, and day-one product engineering wins. Early signals include deal velocity, pricing stability, and attrition trends at Encora. A clear integration plan with quarter-by-quarter milestones will help investors judge execution quality and synergy realization.
Final QIP size, price band, and any accompanying debt will shape dilution and interest costs. A higher equity share cuts leverage but raises dilution. Management commentary on covenants, amortization, and cash buffers will guide balance sheet comfort and the runway for growth investments.
Watch EBIT margins versus guidance and any step-up in subcontracting or SG&A. Collections discipline is key given DSO near 87 days. We will also monitor utilization, offshore shift, and pyramid mix. Sustained progress here can offset dilution and support a rerating from current multiples.
Final Thoughts
Coforge share price held steady as the board cleared a $550 million QIP and signed the Encora agreement. For investors in India, the path from here depends on three things. First, final QIP pricing and mix will determine dilution, which we estimate near 8 percent at today’s levels, purely as an illustration. Second, integration quality must show in margins, utilization, and early cross-sell. Third, cash conversion should improve as receivable days trend lower. Technically, a move above the 50-day average could attract buyers, while ₹1,740 remains key support. Our Meyka quantitative read is Grade B with a Hold stance. Near term, wait for the offer document and integration milestones. Longer term, digital engineering scale can support growth if execution stays tight.
FAQs
The stock steadied near ₹1,738 after the board approved a $550 million QIP and signed the Encora deal. Investors likely balanced dilution fears with the growth upside from digital engineering scale. The market now awaits final QIP pricing and concrete integration milestones to reassess risk-reward.
As an illustration, $550 million equals about ₹4,565 crore at ₹83 per USD. If issued near ₹1,738, that implies roughly 26 million new shares, or around 8 percent dilution. Final dilution depends on the actual issue price and whether debt is also used in the funding mix.
Encora strengthens product engineering, near-shore delivery, and US client reach. It can deepen relationships in healthcare, BFSI, and tech. The key is execution, including client retention, pricing, and talent integration. If synergies show up in margins and growth, it can offset equity dilution over time.
Partially. Technicals show weak momentum and oversold readings, which often reflect known concerns. Clear QIP terms, synergy visibility, and better collections could shift sentiment. A sustained close above the 50-day average would confirm improving demand and reduce the discount for execution risk.
Immediate resistance sits near the 50-day moving average around ₹1,824, with ₹1,875–₹1,900 next. Supports are near ₹1,760 and ₹1,740 from volatility bands. A break above the 50-DMA can open upside, while a drop below ₹1,740 may invite tests of recent swing lows.
Disclaimer:
The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.
