Coforge shares rose nearly 2% on Thursday, reaching ₹1,878 apiece on NSE, as brokerages reaffirmed their positive outlook following the chairman's resignation. The recovery comes after the stock had plunged more than 5% on Wednesday following the announcement of Chairman and Independent Director Om Prakash Bhatt's resignation with immediate effect. Motilal Oswal has reiterated its 'Buy' rating with a target price of ₹2,200, implying 19% upside potential from the previous closing price of ₹1,845. Nuvama retained its 'Buy' call with a target price of ₹2,350, implying more than 27% upside potential. The brokerages dismissed concerns around the resignation, with Nuvama stating that it sees limited business impact and remains positive on the company's growth outlook.
The internal audit, conducted as part of the Q2FY26 internal audit plan, identified concerns about how the board evaluation exercise was handled and presented, as reported by The Times of India. The audit found that material information about Bhatt's own performance had not been fully disclosed to the board when presented. The board subsequently raised its concerns with Bhatt and sought an explanation, while Bhatt responded, but the board was still evaluating his explanation when he resigned on September 8. Coforge stated that the chairman's resignation followed the concerns identified in the internal audit review and the subsequent process undertaken by the Board to seek and consider his explanation. In his resignation email, Bhatt acknowledged the matters raised concerning the board evaluation process and stated that continuing on the Board while there remains a disagreement considering the characteristics of his good faith actions would not be conducive to the effective functioning of the Board. Also read | Key Coforge shareholders were against OP Bhatt's reappointment.
The biggest trigger for the decline was the US Department of Labor suspending Cognizant's PERM filings, as reported by ET Now. PERM, or Permanent Labor Certification, is the process through which US companies sponsor foreign workers for permanent employment and, eventually, green cards. According to US officials, an investigation is underway into alleged irregularities in Cognizant's H-1B and PERM visa programmes. Department of Labor Inspector General Anthony D'Esposito said the investigation is being conducted in coordination with the White House Fraud Task Force, though no criminal charges against Cognizant have been confirmed so far. The development worried investors because foreign employees and visa programmes play an important role in the US operations of Indian IT companies. Infosys fell around 4.17%, HCL Tech declined 3.44% and Tech Mahindra dropped 2.97% on Wednesday, with around ₹55,000 crore wiped out from the market capitalisation of Indian technology companies.
Coforge has designated non-executive independent director Vivek Sharma as interim chairperson until January 31, 2027, as reported by The Times of India. Bhatt will also cease to be a member of the company's board committees with immediate effect. The resignation follows a shareholder vote last month in which investors rejected Bhatt's reappointment as an independent director. At the company's 34th annual general meeting on August 24, the special resolution received 65.4% votes in favour and 34.5% against, failing to secure the required majority. The development comes shortly after shareholders rejected Bhatt's proposed reappointment for another five-year term at Coforge's August annual general meeting, with his existing term originally due to expire in April 2027. Shriram Subramanian, MD of corporate governance research firm InGovern Research Services, noted that disagreements on strategy and policy matters between the chairman and the largest shareholder, Advent, seem to have led to this resignation. The reappointment of OP Bhatt effective May 2027 was voted against, with Advent, the largest shareholder, voting against the proposal.
In the longer term, Coforge shares have jumped 66% in three years and 80% in five years, demonstrating strong historical performance despite recent volatility. The company has a market capitalisation of ₹81,426 crore. Coforge's strong deal wins, sustained execution and improving cash conversion have kept it in good stead, with the stock fetching 11% returns so far in 2026, widely beating the 26% drop in the Nifty IT index. CLSA retains its 'High Conviction Outperform' rating with a target price of ₹2,170, implying about 11% upside from current levels, with the brokerage noting that the company's books are subject to scrutiny from its current and previous private-equity investors, as well as KPMG, its internal auditor, and saw no major governance lapses relating to financial reporting or business operations. Nuvama reiterated its 'Buy' call with a target price of ₹2,350, emphasizing that it continues to expect Coforge to be the growth leader within its coverage universe and reiterates it as its top pick. The brokerage highlighted strong deal wins, continued execution, improving cash conversion, and further margin upside from the Encora integration supporting the medium-term growth outlook. CLSA expects earnings to continue growing through FY29, with EPS growth forecast at 11.3% in FY27, 14.3% in FY28 and 16.1% in FY29, while Nuvama noted that Coforge's FY28 PE was 25x, compared with 31x for Persistent Systems, leaving room for a rerating.
