Coforge gains after 26% equity changes hands; Hulst BV likely seller
On August 24, the share price of Coforge experienced a gain of over 2 percent following a substantial block deal involving the trading of 1.54 crore shares valued at Rs 7,329.3 crore. At 9:50 am, the stock was trading at Rs 5,027 on the NSE, representing a rise of 2.32 percent compared to the previous closing price.
Although the specific buyers and sellers involved in the block deal were not immediately disclosed, CNBC-Awaaz reported, based on insider sources, that Hulst BV was considering selling its entire stake of approximately 26 percent in Coforge, a mid-sized IT company.
It is mentioned that the floor price of the deal was potentially set at Rs 4,550 per share. This price reflected a discount of around 7.4 percent from the closing price of Rs 4,901.95 on August 23. The floor price essentially establishes the minimum price at which the shares can be sold in the block deal.
Overall, the block deal and subsequent share price movement suggest significant market activity and investor interest in Coforge. The involvement of Hulst BV, a major stakeholder, in the potential offloading of its stake adds an interesting dimension to the situation. The difference between the floor price and the previous day’s closing price indicates the dynamics of negotiation and pricing in the block deal process.
Hulst BV, which is registered in the Netherlands, is owned and controlled by funds associated with Baring Private Equity Asia (BPEA), a prominent private equity firm.
In previous transactions, Hulst BV had divested parts of its stake in Coforge through open market transactions. In May, Hulst BV sold a 3.5 percent stake in Coforge for Rs 887 crore. The shares were sold at an average price of Rs 4,125.44 each. Additionally, in February of the same year, Hulst BV had offloaded a 9.8 percent stake in the IT company.
The private equity firm, BPEA, had initially acquired a stake in Coforge in 2019. Over time, its stake had reached 63.99 percent by the end of the quarter ending in March 2021. However, this stake was subsequently reduced through various stake sales, including the aforementioned transactions.
The divestment of stakes by Hulst BV and BPEA signifies the dynamic nature of investments and portfolio management in the equity space. As the ownership percentages fluctuate due to stake sales, acquisitions, and other factors, it reflects the strategies adopted by private equity firms to optimize their investments and generate returns.
As of the end of June 2023, Hulst BV held a stake of 26.63 percent in Coforge, according to data from the Bombay Stock Exchange (BSE). This substantial stake indicates Hulst BV’s significant influence and ownership in the IT firm.
In recent developments, on August 24, Coforge introduced a new artificial intelligence platform called “Quasar.” This platform is designed to enable the development and implementation of enterprise-level artificial intelligence capabilities.
Coforge Quasar is notable for its inclusion of a comprehensive set of over 100 pre-built APIs (Application Programming Interfaces), which are readily available for integration. These APIs offer the means to interact with the platform’s AI capabilities and incorporate them into various applications and systems.
The platform features a modular and scalable architecture, providing flexibility and adaptability to different business needs. Furthermore, Coforge Quasar comes equipped with more than 100 pre-built cognitive and generative use cases. These pre-built use cases cover a wide range of AI applications, making it easier for businesses to implement AI solutions without starting from scratch.
The introduction of Coforge Quasar reflects the company’s commitment to advancing AI capabilities and enabling businesses to leverage artificial intelligence for their operations. This platform holds the potential to facilitate the creation of innovative and impactful AI-driven solutions across various industries and domains.
In conclusion, Coforge’s strategic development of the Quasar AI platform demonstrates its dedication to staying at the forefront of technology and innovation. The platform’s pre-built APIs and use cases offer businesses a streamlined way to integrate AI into their processes and solutions, which could have far-reaching implications for various sectors.
Coforge, a mid-cap IT services company, reported a 2.4 percent sequential increase in its revenue for the April-June quarter, reaching $271.8 million. However, this growth was slightly lower than expected, as the company’s revenue in constant currency terms rose by 2.7 percent, which was below the anticipated 3.5 percent sequential growth.
In terms of Indian rupees, Coforge’s revenue for the June quarter was Rs 2,221 crore, compared to Rs 2,170 crore in the previous quarter. This information was disclosed in a stock exchange filing on July 20.
Despite the relatively modest growth in revenue, the company witnessed a substantial 43.9 percent surge in net profit, which amounted to Rs 165.3 crore. This increase in profit can be attributed to the fact that Coforge had to account for an exceptional expense of Rs 52.3 crore in the previous quarter (March quarter).
In terms of the company’s stock performance, shares of Coforge experienced a 1.18 percent decline, closing at Rs 4,901.95 on the Bombay Stock Exchange (BSE) on August 23. However, it’s worth noting that the company’s shares had shown significant growth earlier in the year, with a 24 percent increase year-to-date.
In summary, Coforge’s financial results for the April-June quarter demonstrate a moderate growth in revenue, albeit slightly below expectations. However, the company’s strong net profit growth indicates its ability to manage expenses and enhance its profitability. The fluctuations in the company’s stock price highlight the dynamics of the market response to its financial performance.
