Use a ratio stack, not a single multiple. For Coforge, start with diluted trailing and forward P/E and EV/EBITDA, then test the implied valuation against revenue growth, EBITDA and EBIT margins, free-cash-flow conversion, ROE and ROCE, balance-sheet leverage, price-to-book and EV/sales. A dated Elara Securities table valued Coforge at 22.4× FY26 P/E, 17.3× EV/EBITDA and 4.2× price-to-book as of 5 May 2026. Those figures are reference points, not a live 17 October 2026 quote or a fair-value target.
The latest consolidated FY26 figures reported by Coforge were $1,870.3 million revenue, $347.4 million EBITDA, an 18.6% EBITDA margin, $269.6 million EBIT, a 14.4% EBIT margin, $177.4 million profit after tax, ₹46.4 earnings per share and $135.4 million free cash flow. The analysis below shows how to decide whether the price you see today is justified by those earnings, cash flows and returns.
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What the FY26 numbers say before you look at the share price
Valuation ratios are only meaningful when their denominators are understood. Coforge’s FY26 investor presentation reports the following consolidated results:
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| Measure | FY26 reported figure | Why it matters for valuation |
|---|---|---|
| Revenue | $1,870.3 million | Base for EV/sales and a check on growth quality |
| EBITDA | $347.4 million | Denominator for EV/EBITDA |
| EBITDA margin | 18.6% | Shows operating profitability before depreciation and amortisation |
| EBIT | $269.6 million | Useful for judging the effect of depreciation and acquired intangible amortisation |
| EBIT margin | 14.4% | Lets you compare EV/sales with an operating-margin outcome |
| Profit after tax | $177.4 million | Denominator for P/E, subject to tax and exceptional-item checks |
| EPS | ₹46.4 | Per-share earnings input; verify diluted shares and currency conversion |
| Free cash flow | $135.4 million | Tests whether accounting earnings become distributable cash |
Coforge said FY26 free cash flow increased 68.4% year over year. That is encouraging, but one year of improvement should not be extrapolated without checking working-capital movements, capital expenditure and acquisition-related cash payments.
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1. P/E: the first test of what investors pay for earnings
Use both trailing and forward P/E
Price-to-earnings is market capitalisation divided by earnings attributable to ordinary shareholders. For an individual investor, the equivalent is share price divided by diluted EPS. Use a trailing P/E for what the company has already earned and a forward P/E for the earnings expected over the next period. Do not mix a current share price with an old EPS or compare a calendar-year forecast with Coforge’s 31 March financial year without labelling the mismatch.
Elara Securities’ dated table showed 22.4× FY26 P/E at 5 May 2026. It is a useful anchor for understanding the market’s valuation at that date, but it must be refreshed with the current price, diluted share count and the latest reported or consensus EPS before making an investment decision.
Normalize the earnings denominator
Reconcile EPS to continuing operations. Examine the notes for one-off tax credits or charges, restructuring costs, acquisition accounting and unusual foreign-exchange gains or losses. A temporary tax benefit can make P/E look low; acquisition-related amortisation can make it look high even when operating cash generation is strong. Keep reported P/E and normalized P/E separate rather than silently replacing one with the other.
Compare like with like
Compare Coforge’s forward P/E with its own five-year range and with a consistent basket of IT-services companies. Use the same fiscal year, diluted-share convention and definition of adjusted earnings for every company. A premium multiple can be rational when growth, margins and cash conversion are superior; it is difficult to defend when those measures are merely average.
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2. EV/EBITDA: the capital-structure check
Why enterprise value can improve the comparison
Enterprise value is equity value plus debt, material lease liabilities and other senior claims, minus cash and liquid investments. EV/EBITDA divides that value by operating EBITDA. Unlike P/E, it is less affected by interest expense, tax rates, buybacks and some exceptional items. It is therefore useful when comparing service companies that hold different amounts of net cash or debt.
Elara’s 5 May 2026 reference was 17.3× FY26 EV/EBITDA. Recalculate the multiple with the latest market capitalisation and balance-sheet data: a company with substantial net cash can have a lower EV/EBITDA than its P/E might suggest, while debt or lease obligations can make the enterprise multiple higher than a simple equity comparison implies.
Use a consistent EBITDA definition
Check whether EBITDA is reported, adjusted or pro forma. If an acquisition contributed only part of the year, annualised EBITDA may overstate the sustainable denominator. Conversely, excluding recurring stock compensation, integration costs or normal delivery expenses can understate the true cost of producing earnings. Apply the same adjustments to Coforge and each peer.
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3. Growth, margins and EV/sales explain whether a multiple is earned
Read EV/sales with operating margins
EV/sales is useful when earnings are temporarily depressed or when companies have different growth profiles. It is not a stand-alone quality measure: two firms can trade at the same EV/sales while their EBITDA margins differ sharply. Coforge’s FY26 18.6% EBITDA margin and 14.4% EBIT margin provide the profitability context for its revenue multiple.
When assessing a premium, ask three questions:
- Is revenue growth broad-based across customers, industries and geographies, or concentrated in one contract or acquisition?
- Are EBITDA and EBIT margins stable, expanding or being diluted by integration and hiring costs?
- Does incremental revenue carry an attractive incremental margin, or does growth require proportionally more delivery expense?
EV/sales is most informative when placed beside growth and margins in a peer table. A high-growth, high-margin company can justify a higher sales multiple than a slower, lower-margin provider; the ratio alone cannot establish that difference.
4. Price-to-book and ROE: useful secondary checks for an asset-light business
Why book value is an imperfect primary measure
Price-to-book compares market capitalisation with shareholders’ equity. For an IT-services company, much of the economic value lies in employees, customer relationships, contracts, know-how and internally developed capability. Those assets may be expensed or only partly recognised on the balance sheet, so book value does not capture the whole franchise.
Elara reported 4.2× FY26 price-to-book. Treat that as a secondary check, not proof that Coforge is expensive or cheap. Inspect changes in equity after acquisitions, goodwill recognition, purchase-price accounting and buybacks before interpreting the ratio.
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Elara’s table showed 19.5% FY26 ROE. A high ROE supports a higher P/B only when it comes from durable operating margins and genuine cash generation. ROE can be mechanically lifted by a small equity base after buybacks, acquisition accounting or impairment charges. Break ROE into profitability, asset turnover and financial leverage where possible, and check whether the result persists across several years.
Coforge’s investor-relations material describes its strategy as combining humans and agents around an enterprise data core and cloud foundation purpose-built for AI. That statement helps explain why investors may value capabilities that are not fully visible in tangible book value, but strategic language is not a substitute for measured bookings, revenue, margins and cash flow.
5. Free-cash-flow yield and cash conversion test earnings quality
Calculate the cash yield
Free-cash-flow yield equals free cash flow divided by market capitalisation. Coforge reported $135.4 million of FY26 free cash flow, described as up 68.4% year over year. To calculate the yield, use the same currency and the current equity value; do not divide a dollar cash-flow figure by a rupee market capitalisation without conversion.
Compare cash flow with PAT and EPS
Compare operating cash flow and free cash flow with the $177.4 million FY26 PAT and ₹46.4 EPS. Strong conversion over several periods supports the credibility of the P/E denominator. Weak conversion calls for an explanation: receivables may have risen, contract assets may have absorbed cash, bonuses may be paid later, or acquisition spending may sit outside a simple operating-profit measure.
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6. ROCE, net debt-to-EBITDA and dividend yield complete the risk picture
ROCE measures operating efficiency
Return on capital employed tests operating profit against the capital required to run the business. It is useful alongside ROE because it is less dependent on the financing mix. Compare ROCE with the company’s cost of capital and with peers, using the same treatment for leases, goodwill and acquired intangibles.
Net debt-to-EBITDA tests resilience
Net debt-to-EBITDA indicates how many years of current EBITDA would theoretically be needed to repay net debt. Elara’s dated table showed -0.3×, which indicates net cash rather than net debt under that convention. Confirm the current cash, borrowings, lease liabilities and restricted cash before relying on the figure. Net cash can reduce financial risk and enterprise value, but excess cash also deserves scrutiny: determine whether it is operationally required, earmarked for acquisitions or available for distribution.
Dividend yield and payout show the cash-return choice
Dividend yield is the annual dividend divided by the share price; payout is dividends divided by earnings or free cash flow. Use them as context, not as a buy signal. A low yield may reflect reinvestment in growth, while a high yield can reflect a falling share price or an unsustainably high payout. Motilal Oswal’s historical and forecast tables provide ROE, ROCE, dividend yield and cash-flow series that can be used to build a consistent comparison, although the underlying year and forecast assumptions must be checked.
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- Freeze the date. Record the share price, exchange rate, diluted shares outstanding and the latest consolidated balance sheet on the same date.
- Build the earnings case. Calculate trailing and forward P/E from continuing operations, then document every normalization for tax, acquisition or restructuring items.
- Build the enterprise case. Add debt and material leases, subtract cash and liquid investments, and calculate EV/EBITDA and EV/sales using consistent definitions.
- Test operating quality. Review revenue growth, 18.6% FY26 EBITDA margin, 14.4% EBIT margin and the direction of incremental margins.
- Test cash quality. Compare $135.4 million free cash flow with $177.4 million PAT, investigate working capital and acquisition cash flows, and calculate free-cash-flow yield.
- Test returns and risk. Examine ROE, ROCE, net debt-to-EBITDA, dividend payout and the effect of buybacks or acquisitions on denominators.
- Compare consistently. Place Coforge beside its own five-year valuation range and a matched IT-services peer set using one fiscal year and one accounting treatment.
- Run scenarios. Model a slower-growth case, a margin-pressure case and a stronger-cash-conversion case. The investment thesis should survive a reasonable downside, not only the base case.
Common valuation mistakes to avoid
- Treating the 22.4× P/E or 17.3× EV/EBITDA anchors as current. They were calculated for 5 May 2026 and can change materially with the share price, earnings estimates and net cash.
- Using basic EPS when diluted EPS is available. Options, convertibles and employee plans can change the per-share denominator.
- Mixing consolidated and standalone figures. The FY26 scale and profitability figures above are consolidated; a standalone denominator is not comparable.
- Ignoring leases in enterprise value. Material lease commitments are operating claims and should be treated consistently across companies.
- Annualising an acquisition without checking ownership and timing. Pro forma revenue or EBITDA may not represent the period actually attributable to Coforge.
- Equating high ROE with high quality. Investigate leverage, buybacks, goodwill and the durability of margins.
- Calling a low P/E a bargain without checking cash conversion. Receivables, contract assets, taxes and capital expenditure can separate accounting profit from cash.
- Comparing mismatched peer data. Different fiscal years, adjusted EBITDA definitions and currency conventions can make a table look precise while being economically inconsistent.
What data to refresh before buying or selling
The National Stock Exchange of India audited consolidated filing covers the year ended 31 March 2026. Before acting on any valuation, refresh the live share price, diluted share count, net cash or debt, trailing EPS, consensus forward EPS and peer multiples. The available material does not establish a reliable live quote for 17 October 2026 or a complete current consensus set, so it cannot support a current fair-value target.
Use the company’s FY26 investor presentation and investor-relations statistics for operating data, the audited IndAS filing for accounting details, and dated analyst tables only as historical valuation snapshots. Record the date and definition beside every ratio in your spreadsheet so that a later price change does not silently turn an old multiple into a supposedly current one.
Practical conclusion
Coforge’s FY26 results provide a solid framework for analysis: $1,870.3 million revenue, 18.6% EBITDA margin, 14.4% EBIT margin and $135.4 million free cash flow. The dated 5 May 2026 valuation of 22.4× P/E, 17.3× EV/EBITDA and 4.2× price-to-book suggests that investors were paying for a profitable, asset-light IT-services business rather than valuing it on book value alone. Whether that premium remains justified depends on the price today, the durability of growth and margins, conversion of PAT into cash, and the returns earned on operating capital. A disciplined investor therefore updates the full ratio stack and tests a downside case instead of relying on one headline multiple.
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