Coforge shares fall after board gives nod to Rs 3,200-crore QIP; what's troubling investors?

Coforge share price news: Coforge shares fell in a weak market on Tuesday, continuing to fall for a second straight session, after the IT firm's board approved a proposal to raise Rs 3,200 crore through the qualified institutional placement (QIP) route. Foreign brokerage Macquarie said investors could see the potential equity dilution in the company negatively. 

Coforge shares fell as much as 2.1 per cent to Rs 5,573.8 apiece in intraday trade on BSE.  

How Macquarie views Coforge

The brokerage maintained an 'outperform' rating on Coforge with a target of Rs 6,410, suggesting an upside of 12.6 per cent in the stock from the previous close. 

According to the brokerage, the fund-raise by the IT firm could only be for funding acquisitions.

However, it also said that the potential equity dilution of an estimated 8.4 per cent was hypothetical, keeping its price-to-earnings target multiple of 30 x unchanged. 

Typically, companies take the QIP route to raise funds for reasons such as debt repayment or funding of mergers and acquisitions.

According to Zee Business research, Coforge's debt stood at Rs 943 crore, as of September 2023.  

The company may also expand in regions such as Europea, Australia, and Europe, Middle East, and Africa (EMEA).

Catch the latest stock market updates here. For all other news related to business, politics, tech and auto, visit Zeebiz.com.