“We expect the growth in FY24 in BFS compared to FY23 to be significantly lower. FY23 was a fantastic year, BFS business for us grew 47%. In FY24 we expect the BFS business to grow around 15% over FY23,” says Sudhir Singh, CEO, Coforge.
What will be your strategy going ahead?
Step one from our vantage is going to be making sure that we secure the 13-16% CC growth that we have offered to the market. If you look at our record over the last two years, around the second or third quarter of every year in the last two or three years we have been able to revise our guidance up and at the end of the year we have been able to deliver a number that is north of the revised up guidance as well.
This year we need to secure the guidance number that we have talked about and of course, the intent will always be to try to exceed the number.Margins were a bit soft this quarter and you missed the financial year 23 guidance. So what levels you have to improve for your gross margins for this financial year?
So this year if we look at it, our margin came in at 18.3% adjusted EBITDA. There was a 60 bps negative impact in FY23 over FY22 because of hedge gain loss. We normally tend to take it against our revenue. Normalizing for that the margins were 18.9%. If I look at quarter four itself, our EBITDA margin went up 109 bps sequentially that came on the back of a sequential increase of 133 bps in quarter three. Margins and revenue, there is always the offset. It has been a very strong revenue growth quarter for us. We could always have taken our feet off the pedal and gone only after margins but we want to make sure at a time like this when macros are uncertain that we continue to drive revenue growth as fast as we can. The guidance we have given to the market for next year, fiscal year 24, is that the gross margin will go up 50 bps and the adjusted EBITDA we will still hold at the same level as this year.

So BFS in US have been weak for your peers. But you have managed to report decent growth there. So you expect some slowdown in coming quarters or will the resilience continue?
We expect the growth in FY24 in BFS compared to FY23 to be significantly lower. FY23 was a fantastic year, BFS business for us grew 47%. In FY24 we expect the BFS business to grow around 15% over FY23. So the macro headwinds in BFS are real, they are significant. You look at sub-segments like mortgages, I mean it is a hill that one needs to climb. So we expect our growth in BFS will moderate very significantly from about 47% to 15%.

So what is your outlook on the ADR listing? What is the timeline you are working with?
We are keeping everything current, we have done our filing with the SEC. We keep the F1 refreshed every four months. We keep every document that is with the Indian regulators also completely refreshed. But we are not moving against a hard timeline. We have already provided this quarter as a one-off cost for all ADR expenses that we have booked so far in the process. We will keep looking at the market, it is a secondary ADR issue when the market becomes favourable that is when we will decide to pull the trigger.

And you have achieved the mark of $1 billion revenue, right? So what is next there?
$2 billion with accelerated speed is the goal that we have. We have been doing exercises over the last, I would say almost the entire year. Internally we have the quarter in which we expect to hit 2 billion as a run rate PAT down. Internally, we have established a year that we are not talking about publicly. When we need to hit 2 billion, we have already mapped it to the elements that will lead us to that space. We have already mapped it to the margins that we need to have at that level. So 2 billion in the short term is the number we are going for.

So how is the deal pipeline looking like lastly?
I did call this out very explicitly and very consciously that the deal pipeline continues to be resilient. Quarter four that closed, we closed two large deals. Quarter one, we are already one month into the quarter. So like any other organisation, we have clear sight to what the quarter’s likely to be like and we believe the deal velocity will sustain in quarter one as well. So at this point in time still resilient, the market is stressed. Demand clearly is under pressure. I mean the amount of demand that we can address clearly is contracting. But as we see it, deal velocity is specific to us and we think it is likely to sustain in the short term.


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