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Shares of Coforge Ltd. fell more than 3% on Tuesday, September 15, after independent director and NRC chairperson DK Singh stepped down on Friday, days after chairman OP Bhatt's exit. At an investor call on Monday, the company reiterated its FY27 financial guidance and said the recent developments have not changed its strategy or priorities.
Coforge continues to expect a consolidated EBITDA margin of 20.5%-21%, EBIT margin of at least 15.5% and free-cash-flow conversion of above 100% of PAT for FY27. The company also retained its $5 billion four-year target.
All seven board members attended the investor call, with management reiterating that the recent governance developments have not altered the company's strategy, priorities or FY27 outlook.
Coforge also said Q2FY27 could be its highest-ever quarter for large-deal signings, indicating strong deal activity in the current quarter.
Global search begins for two independent directors
Coforge has started a global search for two new independent directors and has appointed executive search firm Egon Zehnder for the process.
The search comes after independent director and NRC chairperson DK Singh resigned on September 11, days after chairman OP Bhatt's exit. Singh had cited differences and tension between independent and executive directors, a claim Coforge has rejected as unfounded.
The company said interim chair Vivek Sharma will not contest for the permanent chairperson position and that only an independent director will be considered for the role.
Sharma's independence was also raised during the investor call. Management said his appointment followed an 11-month global search, during which 21 candidates were considered and eight shortlisted. Shareholders subsequently approved his appointment with more than 83% support.
Coforge also said it does not expect further board churn, with the board currently working as a cohesive team.
KPMG Review: No further external investigation planned
On whether another independent or third-party investigation would be undertaken, Audit Committee Chair Anil Chanana said no further external review is planned.
Management said KPMG had already conducted the external internal-audit review and that another adviser was not considered necessary.
The governance questions follow observations around the process used for the Board Evaluation Exercise. Coforge has sought to delink the issue from its operating and financial performance.
Extensive debate on Encora acquisition
Management said there had been extensive debate among the board over the Encora acquisition, but the final decision to proceed was unanimous.
Coforge's June-quarter results included Encora's consolidation for the first time. The company reported US dollar revenue of $592.2 million, up 21.1% sequentially, while rupee revenue rose 24.2% to ₹5,527.7 crore. Organic constant-currency growth was 1.1%, or 5.2% excluding exited businesses.
The company won $691 million of orders in Q1, taking its order book to $2.23 billion.
Coforge is scheduled to hold an Investor Day on September 17, where it will make its first reveal of its open-weight and open-source AI practice.
CLSA said Coforge is positioning itself on the AI opportunity through initiatives including an FDE academy, a human-plus-AI-agent delivery model, work with open-weight and open-source models, and stronger cloud-engineering capabilities. It has a "high-conviction outperform" rating on the stock with a target of ₹2,170.
Brokerages see scope for recovery in Coforge
Nomura retained a "Buy" rating on Coforge with a target price of ₹1,860, just above Friday's closing price of ₹1,846.50. The target implies an upside of less than 1%.
Nomura said a quick backfill of independent directors and appointment of a permanent chairperson would be steps in the right direction, while management's assurance that the governance issue would not affect operations, financials or FY27 guidance remains important.
CLSA noted that the board resignations had weighed on investor sentiment, with the stock correcting around 4.5% over the past week.
The broader analyst consensus, according to Bloomberg data, is "Buy", with 34 of 41 analysts covering the stock recommending "Buy", two have a "Hold" rating and five have a "Sell" recommendation. The 12-month consensus target of ₹1,939.85 implies around 5% upside from Friday's close.
Coforge shares were trading more than 3% down on Tuesday morning at ₹1,790. The stock has gained nearly 8% so far in 2026 and about 2% over the last year.
