Management maintains FY27 guidance amid board changes at Coforge

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Changes to Coforge's board and FY27 guidance

Highlights

Coforge Chairman Om Prakash Bhatt and NRC head DK Singh resigned after KPMG's audit review found that the board evaluation report had not been shared.
Management maintained FY27 guidance for a 20.5-21 percent Ebitda margin, 15.5 percent Ebit margin, 100 percent free cash flow conversion, and $5 billion in revenue.
Bhatt's reappointment did not receive the required 75 percent vote at the AGM due to shareholder opposition, including from Advent International, leaving investors cautious.

This article was translated from the original. Read the original version by our correspondent here.

Board review, resignations, and the company's clarification

According to Forbes India, the resignations disclosed on September 8 and September 10 followed KPMG's internal audit review, which examined the accuracy and completeness of board reporting and the process related to the FY26 annual board evaluation. The company says the resignations of Chairman Om Prakash Bhatt and Nomination and Remuneration Committee head DK Singh were not linked to any operational, financial, or strategic differences.

According to the company, the findings of the board evaluation report were not fully shared with other board members. In its September 10 filing, Coforge said the chairman category received the lowest rating in the board evaluation report, but the matter was neither fully discussed in the NRC nor fully disclosed to the entire board.

During the analyst call on September 14, interim Chairperson Vivek Sharma said the recent resignations were follow-up steps to the internal review process and that the board is working cohesively. He also said that two new professionals are expected to join the board in the near term, while he will remain interim Chairperson until the end of January.

Impact on investor sentiment and growth targets

Investors appear cautious about treating the developments as routine changes, as the near-simultaneous departure of the chairman and NRC head is seen as unusual at an IT company with ambitious growth plans. Nomura analyst Abhishek Bhandari believes the prompt appointment of new independent directors and the selection of a permanent Chairperson will be important steps toward restoring confidence.

Despite this, management is maintaining its FY27 guidance. CFO Saurabh Goel reiterated during the analyst call that the company remains on track for a 20.5 to 21 percent Ebitda margin, a 15.5 percent Ebit margin, 100 percent free cash flow conversion, and $5 billion in revenue within four years.

According to JM Financial analyst Rajiv Berlia, management is confident of broad-based revenue growth across various verticals and geographic markets, and the company remains focused on a sustainable range of 3 to 4 percent quarter-on-quarter constant-currency revenue growth. Meanwhile, at the annual general meeting on August 24, Bhatt's reappointment beyond May 2027 did not receive the required 75 percent vote, while Advent International, which holds around a 20 percent stake in Coforge following the Encora deal, was among the shareholders voting against it.

Following Om Prakash Bhatt's departure as Chairman and independent director at Coforge, our previous report said that questions were raised over disclosures amid the internal audit's review of the board evaluation process, although panic in the stock remained limited after the initial decline. The coverage also noted that the company had appointed Vivek Sharma as interim Chairperson until January 31, 2027, and that the market remains focused on the appointment of a permanent chairman and further clarity.

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