Shares of Coforge Limited surged 6% on Tuesday after the company announced a $1.56 billion multi-year partnership with Sabre Corporation, a leading global travel technology provider. The collaboration aims to accelerate product innovation and streamline delivery through next-generation AI-driven solutions.
This deal marks a significant milestone in the 13-year partnership between Coforge and Sabre, further strengthening their collaboration. Under this agreement, Coforge will leverage its expertise in artificial intelligence, cloud computing, data analytics, and automation to help Sabre expedite product development and introduce cutting-edge digital solutions for the travel industry.
Brokerage Upgrade: Kotak Raises Target to ₹9,000
Following the announcement, Kotak Institutional Equities upgraded Coforge to ‘Buy’, setting a target price of ₹9,000. The brokerage sees this as a pivotal deal that strengthens Coforge’s position in the Travel, Transportation, and Hospitality (TTH) vertical.
Key Takeaways from the Deal:
- Revenue Boost: The contract could drive front-ended revenue growth, enhancing Coforge’s top-line momentum in the near term.
- Sales and Solutioning Strength: The deal highlights Coforge’s strong sales execution capabilities and domain expertise in the TTH sector, which could lead to further long-term opportunities.
- Associated Risks: Despite the positive outlook, Sabre is currently in a transition phase, with a weaker financial standing, which introduces potential execution risks.
Financial Adjustments and Stock Performance:
Kotak has trimmed its EBIT margin estimates by 50-60 basis points, leading to a 4-5% cut in EPS estimates. However, the brokerage finds the recent 18% decline in Coforge’s stock price over the past three months as an attractive entry point for investors.
