NewsCorporate ActionsCoforge Shares Under Pressure Ahead of Board Meeting on Fund Raising ProposalCoforge Shares Under Pressure Ahead of Board Meeting on Fund Raising Proposal
Coforge shares have declined 7% in two sessions ahead of Friday's board meeting to consider a fund raising proposal announced on December 23. This marks the company's second fund raise in 18 months after previously raising ₹2,240 crore via QIP for Cigniti Technologies acquisition. With negligible cash reserves and a $2 billion revenue target, investor concerns center on potential dilution and the company's weak cash conversion guidance among peers.
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Coforge Ltd. shares are drawing significant attention as the IT services company prepares for a crucial board meeting on Friday, December 26, to deliberate on a fund raising proposal. The announcement, made to stock exchanges on Tuesday, December 23, has already impacted the stock's performance, with shares declining 7% over the subsequent two trading sessions.
Fund Raising Details and Market Impact
The company has scheduled both the board meeting and an analyst meet for Friday evening, indicating the significance of the proposed fund raising initiative. Market sentiment has turned cautious since the announcement, reflecting investor concerns about potential equity dilution.
| Parameter | Details |
|---|---|
| Board Meeting Date | Friday, December 26 |
| Announcement Date | Tuesday, December 23 |
| Stock Decline Since Announcement | 7% in two sessions |
| Previous Session Close | ₹1,737.00 per share |
| Previous Session Decline | 2.40% |
Previous Fund Raising History
This marks the second fund raising attempt by Coforge within the last 18 months. The company previously raised ₹2,240.00 crore through a qualified institutional placement (QIP) to eligible institutional buyers, specifically to fund the acquisition of Cigniti Technologies.
| Previous QIP Details | Specifications |
|---|---|
| Amount Raised | ₹2,240.00 crore |
| Issue Price | ₹4,600.00 per share |
| Purpose | Cigniti Technologies acquisition |
| Buyer Category | Eligible institutional investors |
Note: The previous issue price is not adjusted for the stock split conducted earlier this year.
Financial Position and Growth Targets
Coforge currently maintains negligible cash reserves on its balance sheet while pursuing ambitious growth targets. The company is working toward achieving a $2 billion revenue run-rate over the next few quarters. During its previous analyst meeting, management assured stakeholders that no additional data center investments would be included in the current offering.
Investor Concerns and Market Challenges
Several factors are contributing to the stock's underperformance and investor apprehension:
- Dilution Risk: Potential further equity dilution from the new fund raise
- Cash Conversion: The company's cash conversion guidance remains the weakest among industry peers
- Free Cash Flow Concerns: Questions surrounding the sustainability of the 70% free cash flow to PAT guidance
Stock Performance Overview
| Performance Metric | Value |
|---|---|
| Year-to-Date Decline | 9.80% |
| Recent Session Close | ₹1,737.00 |
| Recent Session Change | -2.40% |
The stock's year-to-date performance shows a decline of 9.80%, reflecting broader market concerns about the company's financial strategy and growth funding requirements. The upcoming board meeting and analyst interaction will likely provide crucial insights into the company's capital allocation strategy and future growth plans.
Historical Stock Returns for Coforge
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| 0.0% | -5.80% | -3.90% | -6.68% | -7.51% | +227.55% |
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