Financial Ratios Analysis | COFORGE Ltd.

Company Overview: Coforge Ltd. (formerly NIIT Technologies) is a leading Indian multinational IT company. It specializes in delivering advanced technology services across sectors such as insurance, travel, banking, and healthcare. With offerings in data analytics, cloud services, and AI, Coforge bridges industry expertise with cutting-edge technology to help businesses thrive. 

Financial Performance and Key Ratios

Profitability Analysis:

• Gross Profit Margin: Reflects strong cost management, peaking in 2022. However, a decline was observed in 2023.

• Net Profit Margin: Highlights overall profitability; a significant drop in 2023 after a strong performance in 2022.

• Operating Profit Margin: Indicates the efficiency of core business operations, following similar trends to the net profit margin.

EPS (Earnings Per Share): Consistent improvement in EPS between 2022 and 2023, showing increased profitability per share despite challenges in 2021.

Liquidity and Efficiency:

• Current Ratio: Improved from 2022 to 2023, showing enhanced ability to cover short-term liabilities.

• Quick Ratio: Increased liquidity in 2023 but remains lower than its peak in 2020.

• Days’ Receivables: Increasing collection periods indicate a need to manage receivables more efficiently to avoid cash flow constraints.

Fixed Asset Turnover: High and consistently improving, with a ratio of 5.95 in 2023, suggesting efficient use of fixed assets to generate revenue.

Capitalization:

• Debt-to-Equity Ratio: A low and decreasing ratio over the years, highlighting Coforge’s conservative use of debt.

• Interest Coverage: Declined in recent years but remains strong, indicating the company’s ability to manage its interest obligations.

• Dividend Payout: Steadily increased over the last two years, reflecting a stable return to shareholders.

Conclusion:

Coforge Ltd. demonstrates strong financial health, with efficient use of assets, conservative debt levels, and consistent dividend payouts. Although profitability declined in 2023, the company’s resilience is evident in its improved liquidity and strong EPS growth.
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