Coforge shares jump on $2.35B Encora acquisition
Shares of Coforge rose more than 2 percent during morning trade on December 29 after the IT services firm announced the acquisition of US-based engineering services company Encora in a $2.35-billion all-stock deal.
The stock climbed to Rs 1,711 per share in early Monday trading, snapping a three-session losing streak, even as brokerages remained divided on the long-term impact of the acquisition of the AI-focused firm, News.Az reports, citing Moneycontrol.
In an exchange filing released after market hours on December 26, Coforge said the transaction will be carried out through a share swap. The company will issue 93.8 million equity shares priced at Rs 1,815.91 each, implying a non-cash consideration of around Rs 17,032 crore. Following the issuance, Encora shareholders will own about 21.25 percent of Coforge’s post-issue equity capital.
In a statement issued after its board meeting, Coforge said the acquisition would create a $2.5-billion technology services company with expanded scale and capabilities across AI-led engineering, cloud, and data services to deliver enterprise-grade AI solutions.
Moneycontrol had earlier reported exclusively that Coforge was in advanced talks to acquire Encora, a deal expected to rank among the largest transactions in the digital engineering space.
Brokerage views on the deal remained mixed. Macquarie turned bullish on Coforge, upgrading the stock to “Outperform” from “Underperform” and raising its target price to Rs 2,230 per share, implying an upside of over 33 percent from the previous close. According to CNBC-TV18, the brokerage expects the acquisition to strengthen Coforge’s service portfolio and accelerate revenue growth, with long-term sustainable growth projected at 15–18 percent.
In contrast, Elara Capital downgraded the stock to “Reduce” from “Accumulate” and cut its target price to Rs 1,720 from Rs 2,120, implying an upside of nearly 3 percent. While Elara acknowledged the deal could help Coforge address gaps in the North American market, it flagged concerns over valuation, noting that Encora’s organic revenue growth of 7–10 percent over the past two years lagged Coforge’s growth, making the acquisition appear expensive at an EV/sales multiple of 3.9x.
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