Coforge Grows Q1 Profit Even as Encora Integration Continues; AI Engineering Dominates Quarter

Mid-tier IT services firm Coforge reported a 63% year-on-year jump in consolidated net profit for the June quarter, driven by growth in its AI-led engineering business and the integration of its recently acquired US firm Encora.

Consolidated net profit for the quarter stood at ₹518.6 crore ($54 million), compared with ₹317.4 crore a year earlier.

However, on a sequential basis, the net profit dropped 15.3%, primarily due to multiple one-offs incurred by the company during the quarter. These include acquisition and integration costs of ₹61.3 crore related to Encora, ₹5 crore of legal costs related to a cyber litigation matter, and provisions against customer receivables of ₹10.8 crore. These were partly offset by forex gains of ₹22.1 crore, arising from the devaluation of the Bolivian currency.

These led to Coforge incurring net exceptional costs of ₹55 crore during the quarter.

Revenue from operations totalled ₹5,527.7 crore ($577 million), up 49% year-on-year in rupee terms and 33% in dollar terms.

EBITDA rose 74% year-on-year to ₹1,123.3 crore ($117 million), with EBITDA margin expanding 285 basis points to 20.3%.

Basic earnings per share rose 67.3% to ₹12.34. The board also declared an interim dividend of ₹4 per equity share and gave in-principle approval to set up an entity in China as part of the company's expansion plans, 

AI at the Core

Coforge said AI-led engineering, data, and cloud services together accounted for 86% of its revenue in the quarter. AI-led Engineering alone made up 50.4% of revenue by service line, up from 45.9% in the year-ago quarter.

“The confluence of our next twelve-month signed order book of $2.23 billion, an exceptionally strong large deal pipeline and differentiated capabilities with 86% of our revenues coming from AI-led engineering, data and cloud services has set us up to be the industry growth leader for the third year running,” Sudhir Singh, Chief Executive Officer and Executive Director, Coforge, said in a statement.

During the quarter, the company launched Coforge Nuuron, described as an AI operating system meant to help enterprises industrialise AI-driven outcomes across the business by orchestrating knowledge, decision intelligence, AI agents, and execution systems into a unified autonomous operating model. 

It also unveiled the NEXA Agentic AI Platform, built for the insurance industry, and Aeronova.AI, an AI-enabled framework to help airlines transition from legacy PNR-based systems to order-led retailing.

Order Book and Deal Wins

Fresh order intake for the quarter stood at $691 million in total contract value, up from $648 million in the preceding quarter. 

The executable order book for the next 12 months rose to $2.23 billion, up 27% sequentially. 

The company signed four large deals during the quarter across North America, Europe, and Latin America.

Encora Integration

Coforge said its acquisition of Encora, a digital engineering services firm, was now fully operationally integrated. Two months of Encora's contribution added $100.7 million to the topline following the deal's completion on April 23.

“With the Encora acquisition completely operationally integrated and with strong demand, record visibility, and a rapidly expanding pipeline of AI-led opportunities, FY27 is shaping up to be an exceptional performance year for the firm,” said Singh.

The company reported a next-12-month order book increase of 27% quarter-on-quarter, and said its top five clients contributed 18.0% of quarterly revenue while its top 10 clients contributed 26.1%.

Total headcount stood at 46,228 at the end of the quarter.

Coforge’s shares were up 9.48% on the NSE at 12:30 pm on July 28, trading at ₹1,672.7 apiece.