High Dividend Paying IT Stock Rallies 10% On Block Deal Buzz, LIC Gains Rs 179 Crore In 1 Day; Do You Own?

Digital services and solutions provider, Coforge, is among high dividend-paying stocks and on Thursday it skyrocketed by nearly 10% due to block deal buzz. There are more buyers in Coforge than sellers on August 24. The stock recorded more than 2.55 lakh equity shares in bulk that exchanged hands. Also, there is a buzz that Hulst BV is planning to sell its entire 26% stake in the company. Nevertheless, due to a sharp rally, the largest life insurer in India, LIC has gained hefty in 1 day. Coforge share price has further upside potential.

At the time of writing, Coforge shares traded at Rs 5399.50 apiece, up by Rs 487.90 or 9.93% on BSE. The stock also touched the Rs 5,400 mark in the intraday trade --- which is closer to its 52-week high of Rs 5,420 apiece and also 10% upper circuit of Rs 5,402.75 apiece.

Currently, the market cap is at Rs 32,887 crore.

Data from BSE showed that some 2,55,860 equity shares were exchanged at the opening bell around 9.15 a.m. in Coforge. The names of the investors are not known immediately. So far in the day, 4,47,066 shares exchanged hands in Coforge.

CNBC-Awaaz has reported that Hulst BV was looking to offload its entire ~26 per cent stake in the company at a floor price of Rs 4,550 -- which is at a discount of nearly 7.4% from Wednesday's closing price of Rs 4911.60 apiece on BSE.

As of June 30, 2023, the BPEA (Baring Private Equity Asia)-backed company, Hulst BV's shareholding is to the tune of 1,62,71,260 equity shares or 26.63% in Coforge. Hulst is the only promoter in the company. Its remaining 73.37% stake is held by public shareholders which include renowned funds like HDFC MF, DSP Midcap Fund, Mirae Asset Emerging Bluechip Fund and UTI Flexi Fund among others.

Life insurers like LIC, SBI Life and HDFC Life are also among the public shareholders of the company.

Due to a strong rally on Thursday, LIC records a gain of Rs 179.33 crore in Coforge shares in 1 day. LIC's holding is 36,71,687 equity shares or 6.01% of the company. On the latest intraday high, LIC's shareholding is valued at Rs 1,982.71 crore -- as against the value of Rs 1,803.39 crore on the closing price of August 23.

Apart from this, Coforge also on Thursday launched Coforge Quasar, a Gen AI Platform designed to build Enterprise AI capabilities. Coforge Quasar comes pre-loaded with a comprehensive set of 100+ APIs, readily available for integration. Featuring a modular and scalable architecture, Quasar boasts an array of 100+ pre-built cognitive and generative use cases, facilitating the creation of out-of-the-box solutions. The platform operates on a fully governed framework, incorporating Process Governance, API Governance, and Model Governance (MLOps) within its foundation. Enterprises can choose a cloud-based setup or an on-premise setup with enhanced security and controls.

Post Q1 results, Axis Securities in its latest note dated August 18, said, "We are encouraged by the improved outlook in the vertical and engagement with clients give us confidence in the company's prospects.TCV was strong in Q1FY24, with robust quarter-high deal wins at $531 Mn each in BFSI and Travel verticals. The US is seeing higher cost optimization deals (with faster decision-making), while the European market remains impacted. As the macroeconomic environment stabilizes, the company expects decision-making to pick up."

Given Coforge's strong growth potential, supported by solid deal-making and excellent execution capabilities, Axis Securities said, "We recommend BUY on the stock." The target price is set at Rs 5.900 apiece.

Also, analysts at Indsec Research in their Q1 review note said, "Coforge's management remains quite confident of achieving its FY24 guidance. The performance in 1Q was in line with the expectations. Wage hikes, Visa costs, remaining portion of the $1bn revenue celebration costs resulted in lower margins YoY. Mega deals like the $300mn TCV deal followed by another $65mn TCV deal in the BFS segment led to a record order intake of $513mn in 1Q FY24. Coforge added 1k net employees to support future growth. Offshore revenues continue to expand further. BFS and the Insurance vertical reported solid QoQ CC growth. Overall, Coforge remains resilient in this challenging macro environment."

Indsec Research recommended holding the stock for a target price of Rs 5,949 apiece.

Recently, in August, Coforge shares turned ex-dividend for an interim dividend of Rs 19 per share for the financial year 2022-23. The tech firm has been rewarding shareholders with dividend benefits consistently.

Since July 2005, Coforge has distributed 27 dividends.

In the past 12 months, the company paid up to Rs 70 dividends per share. At the current market price, its dividend yield is 1.30%.

Disclaimer:

The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.