Coforge reported first quarter revenue of $592.2m on Monday. That is a rise of 33% in dollar terms over the year, and 21.1% on the previous quarter. In rupees the annual increase reads 49%. Profit after tax reached $55.6m.
Those numbers land in an industry bracing to shrink.
HCL Technologies has warned of “AI deflation”. Its chief executive C. Vijayakumar said revenue would fall by three to five percent in the coming year, The Register reported in April. Analysts expect the six largest Indian IT firms to manage 2.8% constant currency growth this financial year.
Coforge grew roughly twelve times faster than that forecast, and it credits the technology its rivals blame.
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“The confluence of our next twelve month signed order book of $2.23 billion, an exceptionally strong large deal pipeline and differentiated capabilities with 86% of our revenues coming from AI-led engineering, data and cloud services has set us up to be the industry growth leader for the third year running,” said Sudhir Singh, chief executive and executive director.
The margin claim
Operating margins moved sharply. EBIT margin reached 16.0%, a gain of 414 basis points over the year. EBITDA margin reached 20.3%, up 285 basis points.
Singh attributed the expansion to “the impact of AI infusion at scale in client delivery and internal operations”. He also said the quarter beat the company’s own targets, adding that “consolidated Q1 margins have come ahead of our annual margin guidance”.
The claim inverts the deflation thesis. Indian IT has historically billed for people, so cheaper delivery ought to compress revenue rather than lift margins.
Staff numbers point the same way. Trailing twelve month attrition fell to 10.4%, from 10.8% a quarter earlier.
The number the release leaves out
Coforge closed its acquisition of Encora during the period. The deal valued Encora at $2.35bn and was paid in shares. Singh said the business is now “completely operationally integrated”.
Encora’s owners, Advent International and Warburg Pincus, took roughly 20% of Coforge in the swap.
The results release gives no organic growth figure. It also gives no earnings per share.
Both gaps matter. Profit rose 110% in rupees, but the share count rose as well, so the gain for each existing shareholder is smaller than the headline suggests.
One line does not reconcile
Every headline figure appears in both currencies. Three of the four pairs behave consistently.
Revenue, EBITDA and EBIT each imply the rupee weakened by about 12% against the dollar over the year. The profit line does not. Growth of 110% in rupees alongside 46% in dollars implies a move closer to 44%.
The release does not explain the difference.
What the pipeline shows
The forward indicators are strong. Coforge signed $691m of total contract value in the quarter, across four large deals in North America, Europe and Latin America.
Its executable order book for the next twelve months stands at $2.23bn, up 27% on the quarter and 44% on the year. The company separately announced a five year European contract worth more than $230m last week.
An order book is a set of signed commitments rather than recognised revenue. It remains the clearest evidence that the demand is real.
Everyone is buying the same idea
Coforge describes its workforce as including “specialized FDEs in hybrid pod-based delivery units”. Forward deployed engineers sit inside the client and build there.
That model is spreading fast. TCS has been hiring forward deployed AI engineers and buying capability, AWS has put $1bn behind the same idea, and the role now ranks among the defining new AI jobs.
Claiming AI expands margins is not unique either. JPMorgan has told investors a similar story. Capital keeps arriving in India regardless, with Amazon committing an extra $13bn to cloud and AI there by 2030.
What to watch
Coforge launched three products during the quarter. Nuuron is billed as an AI operating system, NEXA targets insurers, and Aeronova.AI helps airlines move off legacy booking systems.
The board recommended an interim dividend of four rupees a share. The release also discloses a registration statement on Form F-1 filed with the US Securities and Exchange Commission, which has not yet become effective.
The comparison gets cleaner with time. Until Encora sits in both the current and prior year figures, the growth rate and the AI margin claim cannot be told apart.
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