Coforge's $2.35 billion deal to buy Encora 'bold' but costly move, analysts say

Coforge

29/12/2025 04:42

** Indian IT firm Coforge COFO.NS to buy Encora at enterprise value of $2.35 billion to boost in-house AI capabilities and expand its footprint in US and Latin America

** However, analysts say the deal is expensive, cautioning against near term earnings and stock price dilution

** Morgan Stanley analysts call the deal a "bold move" but say the price tag appears expensive and is likely to be dilutive to earnings

** Stock trading 1.2% higher at 1,694 rupees, pulling back from initial decline of 2.2%

** COFO's preference share issue creates an overhang once the lock-in period ends, Morgan Stanley says, forecasting a 12–13% decline in Coforge's stock

** DAM Capital analysts say deal to be EPS dilutive, especially since price paid is higher than COFO's current valuation

** YTD, COFO down 12.4% vs IT index's .NIFTYIT 10.9% drop

(Reporting by Kashish Tandon in Bengaluru)

((Kashish.tandon@thomsonreuters.com))