00:00:00,080 --> 00:01:45,740 [speaker_0]

(instrumental music plays) Ladies and gentlemen, good day, and welcome to the Coforge
Limited Q2 FY26 Earnings Conference Call. Please note, all participants' lines will be in a
listen-only mode, and there will be an opportunity for you to ask questions after the
management's opening remarks. Please note that this conference is being recorded. We ha-
have with us today from the management team, Mr. Sudhir Singh, CEO, Mr. John Speight, chief
customer success officer, Mr. Saurabh Goyal, CFO, and Mr. Manish Hemrajani, head of investor
relations. I now hand over the conference to Mr. Manish Hemrajani. Thank you, and over to you,
sir.

00:01:47,320 --> 00:02:20,220 [speaker_1]

Thank you, Inba. Good afternoon, and thank you for joining us to discuss Coforge's results for
the second quarter of FY26, which ended on September 30th, 2025. Before we begin, please
note that today's discussion may include forward-looking statements which involve risks and
uncertainties. Actual results may differ materially and Coforge assumes no obligation to update
these statements. With that, I'll hand the call over to Sudhir.

00:02:20,240 --> 00:10:12,680 [speaker_2]

Thank you, Manish. Uh, ladies, uh, gentlemen, thank you for joining us today as we share our
quarter two fiscal year 26 performance and the outlook for fiscal year 26 and beyond. Quarter
two has been an exceptional quarter for the firm. The firm recorded 5.9% sequential CC growth,
and registered an EBIT of 14% for the quarter. The business is on an even keel and key
operating metrics, number of large deals signed, free cashflow, order intake, next 12, 12
months signed order book, days for days, in addition to other metrics like revenue growth,
EBITDA, and EBIT margin progression continue to reflect the robust health of the business. Our
sustained, robust, and accelerating growth story exemplified by quarter two results is now well
into its ninth year. Our growth continues to be driven by an execution intensity that is uniquely
our own. Execution, we have always believed, is the ability to not just create strategies and
share plans, but to actually deliver upon them. Nowhere has the core DNA of execution and
getting things done got more clearly reflected than in our ability to transform our core business
with AI, and to emerge as a partner, dare I say trusted partner, for our clients that has helped
move them beyond simple AI pilot projects to true integrated enterprise adoption. We are
fundamentally changing the delivery of our technology and BPO services by embedding AI early
on, leveraging our proprietary Coforge IP. Our platforms, including [Link] for enhanced
software reverse engineering, Blueswan for integrated automation and orchestration, and
ForgeX for rapid transformation are infusing generative AI and intelligent automation into the
very fabric of our delivery models. To fully grasp the complexities our clients face on the tech
operations front today, please recognize that AI engineering is very much like software
engineering. The challenges are familiar, but the tools are new. The reliance on traditional SQL
databases must now be augmented by vector databases and embeddings. Simple AI, API calls
are evolving into complex MCP calls to manage the contextual flow of information across
models. This is a landscape characterized by technological confusion and nascent protocols. For
the next 18 to 24 months, the market will be flooded with competing standards and tools. In
this immature ecosystem, our clients need assistance across two different axes. One, they need
assistance to help drive a deep understanding of their industry problems and processes. And
two, they need assistance with driving a deep understanding of how AI works, and critically,
how it does not work. The ability to combine deep industry knowledge with honest technical
counsel is what allows us to deliver solutions that are not just theoretically innovative, but ones
that actually get executed and drive genuine profitable outcomes.I shall leave you with two
examples of actual work done for clients in the AI realm, and after that, seg into our quarterly
results. Example one, we are leveraging [Link], our own code intelligence platform, to
harness the power of advanced LLMs and reasoning models with layered knowledge to decipher
massive undocumented legacy code bases at a leading travel industry client. This process
involves more than just static analysis. The platform, [Link], is designed to reverse
engineer the original intent and complex flow of the code, automatically generating high quality
documentation that explicitly maps out system behaviors and extracts critical business rules.
By creating this comprehensive, structured understanding of the client's core platforms,
[Link] fundamentally enables and de-risks the vital modernization effort. Example two
is an example of using SLM to do forward engineering. For a mid-sized US bank seeking to
modernize its fragmented IT landscape using AI and a low-code platform, we have developed a
custom small language model to accelerate low-code application development on the
OutSystems platform itself. With those two quick examples, I shall now seg into the quarterly
performance and start with revenue analysis. I'm pleased to report the firm registered a
sequential revenue growth of 5.9% in CC terms. In Indian rupee and US dollar terms, the
sequential growth was 8.1% and 4.5%, respectively. The growth during the quarter was led by
the Travel vertical, which grew 6.4% sequentially in dollar terms. Other verticals, which include
Healthcare, Retail, High Tech, and Manufacturing, grew 5.9%. The Insurance vertical grew 1.8%,
and the BFS vertical grew by 4% sequentially. Government Outside India vertical grew 0.4%
QoQ in dollar terms. Our top five clients and our top 10 clients grew 6.2% and 9.8%
quarter-on-quarter, respectively. They contributed 21% and 30.8%, respectively, to our overall
quarter two revenue. Moving on to order intake. Quarter two was yet another strong quarter,
both from an order intake and a large deals closure perspective. During the quarter, we signed
five large deals. The velocity and median size of large deals signed by Coforge has been
increasing over the years, and I shall reflect more on this in my concluding remarks. The total
order intake during quarter two was $514 million US. The executable order book, which reflects
the total value of locked orders over the next 12 months, stands at a record of $1.63 billion.
This number, some of you might recall, was $1.3 billion a year back and is currently 26.7%
higher than at the same time last year. Moving on to the people front. On the people front, our
total headcount at the end of quarter two stood at 34,896. We saw a net people addition of 709
during the quarter. Utilization during the quarter stood at 82.3%. Last 12-month attrition for the
quarter fell further and is now at 11.4%. We remain, as always, one of the lowest attrition firms
across the industry. I shall now hand over the call to Jon Speight, president and executive
director of Coforge, for providing insights into our operations and capability creation. Over to
you, Jon.

00:10:12,720 --> 00:13:19,512 [speaker_3]

Thank you, Sudheer. I will now highlight the quarter's delivery and capability milestones.
Coforge is advancing with an AI-driven service portfolio. Our strategy captures the surge in
enterprise investment in AI infrastructure and data modernization, fueling sustained
high-quality growth. We design solutions that address clients' most complex mission-critical
challenges. AI is embedded from the outset, delivering clear, measurable returns. [Link]
anchors our MissionZero initiative. Clients experience zero-touch operations, zero disruption for
enterprise systems, and zero friction for end users. Over 25 clients have completed a full year
without a single P1 incident. This highly automated delivery model expands margins and
increases contract value. Our proprietary Quasar AI platform now offers multi-framework
agentic support, secure RAG-as-a-service for trusted data, and Smart LLM routing for optimal
performance and cost efficiency. Client success stories this quarter show the impact of our
approach. A major US airline and a European insurtech selected Coforge to implement strategic
domain data meshes, integrating to cloud platforms like Snowflake and Databricks. These
programs establish Coforge as the partner of choice for foundational AI infrastructure and
recurring data engineering revenue. A leading broker dealer fintech chose Coforge to design
and build its agentic AI platform, automating complex financial advisory workloads.... another
U.S. airline selected us to build its enterprise Agentic AI framework on AWS AgentCore, enabling
scalable, autonomous business process execution. For one of the largest... world's largest
fintechs, we established a new quality engineering hub, leveraging our Blue Swan AI
accelerators to embed intelligence throughout the testing lifecycle and accelerate time to
market. AI runs through our delivery lifecycle, driving internal efficiency and strong contract
execution. Our Agentic production support offering for data clients now resolves L1 and L1.5
issues in nightly ETL cycles, delivering immediate cost savings and optimizing margins on ma-...
on managed service contracts. Our AI-driven service portfolio aligns with the future of
enterprise technology spend. Strategic AI programs across engineering, cloud, data, and quality
engineering are fueling durable revenue growth, stronger margins, and enhanced shareholder
value. With that, I will now hand over to our CFO, Saurabh Goyal.

00:13:19,571 --> 00:15:46,982 [speaker_4]

Uh, thank you, John. Um, if you recall, we made, uh, some changes to our disclosures last
quarter, where we presented a detailed breakdown of our financial statements as part of a fact
sheet. This quarter, the fact sheet has been updated to reflect reported profit and loss matrix.
All adjustments, uh, to PnL have been taken off. As previously stated by Sudheer, for the
second quarter, revenue reached $462.1 million. This figure represents a sequential growth of
4.5% in dollar terms, 8.1% in INR terms, and 5.9% in CC terms. The hedge loss reported for the
quarter amounted to INR 307 million rupees as compared to INR 158 million rupees in the
previous quarter, reflecting adverse impact of 78 B- uh, BPS in the reported EBIT. ESOP costs
for the quarter further reduced to 1.4% to revenue for the quarter, reflecting 20 BPS upside on
EBIT. The EBIT margin for quarter two was 14%, an increase of 251 BPS quarter on quarter and
240 B- uh, BPS, uh, year on year. In the first quarter, a one-time bonus provision for employees
amounting to $5.5 million and half a million dollars of acquisition-related expenses was
recorded. PBT sequentially went up 410 BPS, which is on account of foreign exchange gains in
the current quarter and an excess-... uh, exceptional legal expense of $3 million in the first
quarter related to cybersecurity breach with a client. The PAT for quarter two stood at 9.4% of
revenue, an improvement of 82 BPS compared to previous quarter and 275 BPS year on year.
Earning per share for the quarter was 11.2 rupees per share. For the first half of FY26, EPS was
at 20.7 per share, reflecting an increase of 101% over previous year's first half. Capital
expenditure for the quarter stood at $4 million. Free cashflow increased to $37 point million
dollars, reflecting FCF to PAT ratio of 86%. In addition, the company was able to reduce its
credit line, which led to a reduction of interest expenses. Billed DSO stood at 63 days, unbilled
at 26, and contract average at 15, reflecting a total working capital cycle of 104 days. With
that, I hand over to... the call back to Sudheer.

00:15:46,992 --> 00:17:23,871 [speaker_2]

Thank you, Saurabh. Uh, and I shall sum this up as follows. The 5.9% sequential CC growth in
quarter two, our next 12-month signed order book, which is 26.7% higher year on year, our
sales execution engine that has signed 14 large deals last year and has already closed 10 large
deals in the first half of this year, a potential pathway to 14% EBIT in fiscal year 26, one of the
lowest employee attrition rates across the industry are all, ladies, gentlemen, pointers to what
we believe will be an exceptional fiscal 26. We remain committed, strongly committed to
turning in the ninth consecutive year of robust growth, despite the uncertain macros swirling
around our industry. Our growth philosophy, as always, continues to focus on driving very
robust organic growth. We overlay that organic growth with a near perfect record of executing
turnarounds of all assets that we have acquired over the last nine years. Moving forward, we
shall continue to focus on robust organic growth and continue acquisitions as well. With that,
ladies, gentlemen, I conclude my prepared remarks, and I look forward to hearing your
comments, and all three of us look forward to addressing your questions. Thank you.

00:17:25,531 --> 00:17:59,432 [speaker_0]

Thank you very much, sir. Ladies and gentlemen, we will now begin the question-and-answer
session. Anyone who wishes to ask a question may click on raise hand icon from the participant
tab on your screen. We request participants to please restrict to two questions and then return
to the queue for more questions. To rejoin the queue, you may click raise hand icon again. We
will wait for a few m-moments until the question queue assembles. We take the first question
from Abhishek Pathak of Motilal Oswal. Please go ahead.

00:18:00,964 --> 00:18:02,224 [speaker_5]

Yeah. Hi, am I audible?

00:18:02,283 --> 00:18:03,604 [speaker_0]

Yes, sir.

00:18:03,644 --> 00:19:18,333 [speaker_5]

Yeah. Hi, hi team, morning. Uh, congrats on a great quarter. Um, I think, um, great to see, um,
you know, a- a great print across the revenue margins, uh, and cash generation. Uh, Sudhir, my
question is, um, from a two to three year perspective, um, how are you thinking about
optimizing for all these three metrics going forward, right? Because, um, A, growth remains
paramount, B, um, in an uncertain macro where demand still remains, um, kind of sporadic, um,
do we expect, uh, fresher margins for both us and the industry, number two? And number
three, uh, on cash flow as well, uh, you know, uh, where we are growing so fast, uh, what is the
steady state, um, for these metrics for us going forward from here? And, uh, given a choice,
how do you optimize across these three? That's the first question. Uh, and, and the second
question is, um, uh, you know, a very interesting sort of, um, data point around the revenue per
employee that you've shared, uh, it seems to be going up. Um, and to be honest, that, that
looks like, um, you know, the, that, that, that looks like how the industry should move forward.
Um, you know, interested to know your views on how you're doing it so early ahead of the
curve, and, and, and you know, what, what, what will ensure this going forward as well. Thank
you.

00:19:18,333 --> 00:21:06,724 [speaker_2]

Thank you for, uh, for the comments and the questions, Abhishek. Let me take them in order.
Uh, revenue, our, uh, our intent, uh, as always, and as exemplified by our results over the last
nine years, continues to be that over the next two to three years and beyond, we will continue
to turn in sustained and robust growth. That's the clear intent. It has not changed. On margins,
if we do hit the 14% reported EBIT margin plan for the year, we will, at a minimum, irrespective
of the changes in the macros, uh, commit ourselves to delivering on that as the minimum
threshold going forward in the years to come. As far as free cash flow is concerned, and as
Saurabh had noted in his commentary, there was, there were comments that we received on
that last, last quarter. We believe on a sustained basis, you should expect free cash flow to pat
at around 70 to 80% going forward. We are very strongly focused on the free cash flow metric
as well. As far as the second, uh, question around revenue per employee is concerned, you're
right, revenue per employee, we called out the revenue per employee for our tech services
business. It is nudging US$70,000 per employee. It's a metric that we have consciously called
out to illustrate the impact of the AI-led platforms that John has been talking about over the last
six quarters, and the value that they create for our clients and in turn for us. We've always
talked about how high-quality growth, and, and the best exemplar of that high-quality growth
we believe is the RPE metric that you're seeing. Thank you.

00:21:06,823 --> 00:21:10,283 [speaker_5]

I get it. And all the best.

00:21:12,224 --> 00:21:18,344 [speaker_0]

Your next question is from Vibhor Singhal of Nuvaama Equities. Please go ahead.

00:21:20,603 --> 00:22:13,404 [speaker_6]

Yeah. Hi, uh, thanks for taking my question, and congrats team on a, a rock solid performance
once again. Uh, Sudhir, one question for you and another one for Saurabh which I'll take later
on. Uh, so Sudhir, on the, uh, overall demand front, now we've seen multiple macro headwinds
play out in this quarter, uh, from the, uh, hike in H-1B visa fees to a very uncertain macro. Uh,
of course, uh, I mean, um, evidently it doesn't impact our numbers or the results at our level,
but what is your take on how these could actually, uh, if at all, impact the industry going
forward? Uh, and, uh, one, a related question is that, uh, in our growth trajectory, we see, I
think the first two quarters growth of course has been led by the travel vertical because of the
large lead that we had closed out. Uh, going forward, uh, next, let's say, two to four quarters,
uh, which, uh, verticals or which, uh, segments of the business do you think will take
precedence in driving the growth?

00:22:13,444 --> 00:24:48,408 [speaker_2]

Thanks, uh, thanks Vibhor. Uh, demand front, uh, we talked about it over the last few quarters
as well. We continue to believe that, uh, demand, especially with the advent of AI has mutated,
but the addressable demand continues to grow at a solid clip. Uh, when we look at our three
core verticals, banking, insurance, and travel, when we look at the, when we look at the trends
that we see observed within them, we see positive trends. Banking, there are several factors
that are aligning to create favorable conditions all the way from lower interest rates to the
shifts in the regulatory practices. Uh, we are seeing financial institutions embrace real time
everything in the areas of payments or global remittances or security settlements. And of
course, there are the efforts in terms of moving to T+0 as well. So banking demand outlook in
general appears solid from our vantage point. Insurance, as we observe it, the global insurance
industry is entering an above trend growth phase. P&C insurance, every metric we're tracking is
growing at about almost 4.5% per year. And the growth is increasingly coming from our
vantage by more complex risks, higher claims, rate increases, insurers focusing on specialized
products like cyber, et cetera. And even LNA, we see growth of about 5% per year driven by
higher interest rates and more interest in saving products. So that's, that's a quick summary,
Vibhor, in terms of demand outlook. We continue to believe that the demand outlook is
improving on the margins. It's, it's not a vertical takeoff, but it is improving on the margins. As
far as your second question is concerned, and then I'm sure you have a question to start up, as
far as the verticals are concerned, we expect travel to continue to clip along at a solid pace. We
believe insurance, in light of the commentary that I just shared, and banking will both do well....
the two newer verticals that we've alluded to over the last two years are doing very well for us.
It is, one is healthcare, where we think that by the end of this year, we will have a book of
business of almost $100 million. We may not touch that number, but we'll be within n- n-
nudging distance. And the second is public sector outside India, which is a book of business that
has already crossed $150 odd million. And we think that in the coming quarters, we should start
nudging the $200 million run rate on that vertical as well. Those are, those are the answers that
I had for you, Vibhor.

00:24:48,588 --> 00:25:09,848 [speaker_6]

Great. Great. Thank you so much for, uh, those answers, uh, Sudhir. Very clear visibility of
growth of, uh, strategy that you're providing. Uh, Saurabh, uh, if I can just, uh, uh, trouble you
for a couple of questions. So, uh, in this quarter, if I understand correctly, we've actually moved
all the, uh, uh, items like discounting income of long-term contracts and mortgage income and
all, all that from our EBITDA calculations to other income.

00:25:09,858 --> 00:25:09,858 [speaker_2]

Yeah.

00:25:09,888 --> 00:25:16,008 [speaker_6]

So now there will be no disparity between the India's, uh, EBIT and the PPT reported EBIT going
forward as well?
00:25:16,108 --> 00:25:49,048 [speaker_4]
Absolutely right, uh, Vibhor. We have moved that to, uh, other income, and the d- detailed
breakdown is available in the analyst fact sheet in the other income section, wherein you will
see that, uh, the, uh, discounting income and the mortgage income and all of that are being
reflected there. And quarter one has been recasted to reflect that number. And going forward,
we'll focus on reported EBIT. That's the number we will hold, and FCF to fa-... uh, FCF to PAT is
what we will hold, and, uh, revenue anyways we've been holding.

00:25:49,188 --> 00:25:54,508 [speaker_6]

Got it. Got it. And this reported EBIT margin is what we are targeting, that we'll touch 14% in F3
2026?

00:25:54,568 --> 00:25:55,698 [speaker_4]

Yes.

00:25:55,868 --> 00:26:38,408 [speaker_6]

Got it. Got it. Very helpful. I think this clarifies a lot of, uh, concerns which people had regarding
the mismatch in EBITDA numbers. Uh, really good, uh, great to hear that. Uh, secondly, just a
couple of bo- two bookkeeping questions. Uh, what is the, uh, basically, uh, timeline and the
update on the CDT acquisition? When do you think this process can be completed? And
secondly, uh, just as Sudhir just mentioned, that we now have a very large order book, uh, in
the healthcare segment as well. Uh, we have this vertical which we report as others, which con-
consists of healthcare, retail, manufacturing, and all. Uh, do you think there would be a time,
maybe in the next few quarters, when we will start separating them out and, uh, uh, basically
just, uh, give out the matrices of those individual verticals separately once they attain those
size, uh, that critical size?

00:26:38,808 --> 00:26:45,688 [speaker_4]

Sure. Sure. Sure, Vibhor. So, uh, question number one, uh, the NCLT approval has been
received, and-

00:26:45,697 --> 00:26:45,738 [speaker_6]

Okay.

00:26:45,738 --> 00:27:30,728 [speaker_4]

... uh, the cost is to convene a creditors and a shareholders meeting. The date is yet to, uh,
come out, but as soon as the date is out, within 35 to 40 days. It's a time-bound thing. It's not
that it goes on forever. Uh, the meeting has to be convened. After that, it will go back to NCLT,
uh, for the setting motion finding, and then the merger will be completed. We expect that to be
getting completed by either December, Jan timeframe. And whenever the merger is completed,
the, uh, minority interest, as I mentioned earlier, will be taken off effective 1st of April, 2025,
because the effective date of the merger is 1st April, 2025. So-

00:27:30,888 --> 00:27:32,428 [speaker_6]

Net to effectively 2025?

00:27:32,438 --> 00:27:48,628 [speaker_4]

Absolutely. Absolutely right. So that is one. Second, on the healthcare or others component
which has, uh, become larger, uh, you would recall, we used to have a public sector
government outside India, used to be this segment which used to be part of others, which we
have taken out.

00:27:48,648 --> 00:27:48,658 [speaker_6]

Mm-hmm.

00:27:48,728 --> 00:27:53,708 [speaker_4]

So we at least wait for the business to get a, at least a critical mass of $100 million at least.

00:27:53,718 --> 00:27:53,718 [speaker_6]

Got it.

00:27:53,768 --> 00:28:03,728 [speaker_4]

Once that is, we then start reporting that. So hopefully we should see a vertical being carved
out, uh, in next financial year, quarter one of, uh, FY27.

00:28:04,128 --> 00:28:09,468 [speaker_6]

Got it. Got it. Got it. Great. Great, Saurabh. Thank you so much. Thanks, Saurabh and Sudhir,
for taking my questions, and wish you all the best.

00:28:09,508 --> 00:28:11,408 [speaker_4]

Sure.

00:28:11,447 --> 00:28:18,008 [speaker_0]

Thank you. Our next question is from Ankur Rudra of JP Morgan. Please go ahead.

00:28:18,108 --> 00:28:23,808 [speaker_7]

Hi. Thank you for taking my call, and thanks... Good to see the, the margins and cash moving
up. Hi, can you hear me now?

00:28:23,868 --> 00:28:24,808 [speaker_4]

Yeah.

00:28:24,868 --> 00:28:47,588 [speaker_7]

Hi. Uh, good evening. Thank you for taking the question, and good to see the margins and cash
moving up smartly this quarter. Uh, first question is on growth. Uh, Vanaj has been excep-
exceptionally strong, uh, clearly held by the travel, uh, contract. I recall you had highlighted
before that second half could also be stronger. Uh, given how the macro has evolved since
then, how has your outlook evolved for the second half and generally?

00:28:47,668 --> 00:29:12,268 [speaker_2]

Uh, I'll... Uh, both John and I will chip in on this. Um, what we discussed last quarter was that
second half will be a growth half for us over H1 because our H1 numbers have been, uh,
extremely strong. Uh, we continue to maintain that the full fiscal will be a robust growth fiscal
for us. Um, and, uh, H2 will also be robust growth half for us. John, do you want to add to that?

00:29:12,648 --> 00:29:30,668 [speaker_3]

Yeah. Uh, I mean, one thing is to note is traditionally our, um, H2, certainly Q4 is our, our
strongest quar-... one of our strongest quarters. Um, I'd also say looking at the, the, the growth
in our pipeline and opportunities really bodes well.

00:29:30,968 --> 00:29:43,888 [speaker_7]

Appreciated. I think I, I noticed that this hiring, uh, was positive in contrast of other people not
hiring at all, but still was a bit light on tw- 2%, but I'm, I'm sure that's not much for us to read
from an outlook perspective.

00:29:44,968 --> 00:30:14,628 [speaker_4]

No, that's right, uh, because, uh, I think in the hiring is we continue to focus on not only just the
addition of people, but focus on utilization as well. And that is why you will see that the SG&A
cost had got reduced because we've kind of moved people who are part of unbilled, uh,
organization, uh, from a delivery perspective or overheads, they've been moved to billing. And
that is why you saw that the SG&A has gone down, or the G&A part of the, uh, overheads have
gone down, and hence the gross margin has gone up.

00:30:14,648 --> 00:30:20,967 [speaker_2]

Yeah. And plus we're moving into a seasonally weak quarter which has a lot of holidays and
furloughs coming in, hence the hiring observation.

00:30:21,952 --> 00:30:48,692 [speaker_7]

... appreciate it. Uh, on the margin side, you've delivered 14% margins, I think ahead of what
most of us expected. Now, several of your larger peers are actually battling margin issues, and
we hear of pricing pr- pressures thanks to AI-related productivity pass-through. In that
background, does it make sense for you to expand margins further from here or reinvest back
in, either into the business, or to keep it, your margins and your, and your price points more
competitive?

00:30:48,712 --> 00:31:04,332 [speaker_2]

Ankur, uh, once we hit 14% EBIT, if we manage to hit it this year, we will plan to, at a minimum,
clip along at 14% EBIT. But our primary aim will be to make sure that we prioritize growth over
any further EBIT improvement.

00:31:05,992 --> 00:31:09,612 [speaker_7]

So at the moment, the idea is to get to 14%, keep 14% for the year.

00:31:09,621 --> 00:31:09,632 [speaker_2]

Yeah.

00:31:09,652 --> 00:31:15,772 [speaker_7]

But beyond that, uh, we don't intend to, at the moment, expand margins meaningfully.

00:31:15,812 --> 00:31:30,242 [speaker_2]

I mean, if it expands, it expands, but the first imperative will be to prioritize growth and to keep
investing in the business and be a very high growth firm. Uh, 14% will be the minimum that we
will plan to deliver. We will not commit to more than that at this point in time.

00:31:30,312 --> 00:31:53,752 [speaker_4]

Yeah, Ankur. Actually, 14% gives us comfort that we're running a business in a, wherein you
have e- enough scope for investments so that the growth keeps coming in. So, I think that
number once achieved for a year, we'll just hold that number. Focus will be to reinvest anything
that is over and above that for growth because, as Sudheer mentioned, that will be the prime
imperative.

00:31:53,772 --> 00:31:55,952 [speaker_7]

Appreciate the color. Thank you so much. Rest of the team.

00:31:55,992 --> 00:31:57,412 [speaker_4]

Thanks, Ankur.

00:31:57,952 --> 00:32:03,932 [speaker_0]

Thank you. Our next question is from Deepesh Raza of MK Global. Please go ahead.
00:32:03,972 --> 00:33:10,792 [speaker_8]
Yeah, uh, thanks for the opportunity. Uh, couple of questions. First about the file large deals, if
you can provide some, uh, control on those deals. Uh, and particularly if you can touch upon
how those deals are changing in ti- uh, terms of size, shape, and complexity. How Coforge is
evolving, if you can provide some colors around it. Maybe for H1 also helps. Uh, second
question is about the DSO. If I look, DSO is steadily inching up. I'm including all the, including
contract asset. It is almost eight days up. How one should look this overall working capital cycle
evolving for Coforge? You think now we should stabilize or there would be further kind of uptick
possible? Uh, last question is about the healthcare help. You say others is doing well and you
attributed part of it to healthcare. If you can provide some sense about our focus area and what
is working well for us in healthcare, and what kind of investment you plan to ensure this growth
momentum sustaining in that area. Thank you. And one small question, if I can add. Any
expectation about furloughs? Thank you.

00:33:11,572 --> 00:35:00,252 [speaker_2]

Sure, so, uh, four questions in all. I shall take these large deals questions, Saurabh shall address
DSO, John and I will look at healthcare together, and John, um, has just closed a, a highly
complex healthcare program in this week itself. And we'll finally... Uh, furlough is an easy yes,
uh, easy, easy question, so we'll just take that in advance. We do expect furloughs, as, as we
see them every year, and we expect them to be at the same scale as we've seen over the past
few years, which has been significant. With that, the five large deals, three of the large deals
came, Deepesh, from North America. Out of those three large deals, two came in interestingly
from, uh, the insurance vertical in North America, and one came in from, from an airline, a new
airline for us, that was an NN deal. Um, in insurance, out of the two large deals, one was a NN
deal, a new client. So interestingly, out of the three large deals in North America, two were new
clients opened with a large contract. The other two deals came in from the Asia Pacific region.
Each of these deals, what we found very interesting is, uh, uh, the one of the three deals in
North America was around legacy modernization of the mainframe. The new airline where we
started a new relationship with a large deal, this was, uh, fundamentally focused around digital
transformation across all data services and IT services. Uh, and the third deal from North
America in insurance centered around optimizing operations by implementing AI-infused
modern AMS and QE using our own platforms. Uh, those are, that's a quick flavor around the
five large deals. Saurabh, would you like to address, uh, the DSO question?

00:35:00,372 --> 00:36:01,372 [speaker_4]

Yeah. Uh, thank you, Sudheer. So see, the reason for increase in DSO is, one, uh, the year on,
year-on-year growth is 31%. Last two quarters have been 8% and almost 8% in rupee terms.
Now when, when private DSO, we're looking at last 12 months revenue, which is inflating the
DSO numbers because the currency has moved up significantly, that's one. Second is, uh, the
focus is to make sure that FCF to PAT is being maintained, because once that is within control,
rest everything gets under control. So the focus will be to, uh, to maintain FCF to PAT of, uh, of
80 odd percent, 75 to 80 odd percent. And once we maintain that for a year-on-year basis, that
will take care of any concern that we'll have on the DSO. This DSO is more of a metric which is
impacting, getting impacted because of currency and a 30% growth that we have year-on-year.
If you calculate DSO basis current quarter run rate, the numbers will fall significantly.

00:36:01,772 --> 00:36:57,320 [speaker_3]

Hi. Can I just get a job? Thank you, Sudheer. Uh, so a few areas on healthcare that is driving,
driving our growth. One of the areas is there's a huge focus on, uh, how AI can actually be used
to automate and improve patient care. So what we're seeing is a very large drive in improving
the end-to-end platforms, the plumbing, the, the data, the data collection, the, the... So
therefore, they can create insights and, uh, provide that additional, uh, comfort to customers,
to, to, uh, patients.... that's a big area for us, uh, there. The other areas we're seeing a lot of f-
focus on the, uh, payer a- and the life science space. Again, it's how AI and data can be used to
drive, uh, insights and, uh, semantics around, um, patient care, uh, drug, drug, um processing,
and so on.

00:36:57,380 --> 00:37:02,830 [speaker_9]

Debash, those were the answers to your, uh, four questions. Thank you for the patience.

00:37:02,920 --> 00:37:05,060 [speaker_10]

Thank you.

00:37:05,100 --> 00:37:12,920 [speaker_0]

Thank you. We take the next question from Kavaldeep Saluja of Kotak Securities. Please go
ahead.

00:37:12,980 --> 00:37:52,780 [speaker_10]

Hey, hi, uh, thanks a lot, uh, and congratulations on a good all-around performance, Suri. Uh,
my questions are all data-related, so it's all, uh, in for Saurabh. Uh, Saurabh, the first question
that I have is I'm trying to reconcile the big gap between consumer currency revenue growth
and dollar revenue growth this quarter. Your consumer currency is 6%, dollar is four and a half.
I don't... I mean, uh, you know, that's like a chunky 150 basis points gap, uh, uh, between the
two numbers, which seems a little bit, uh, at odds with what I've seen, uh, for the rest of the
players in the industry. Just trying to understand the mechanics and the calculations behind it
here.

00:37:52,820 --> 00:38:25,200 [speaker_4]

So, so two parts to it, uh, Kavaldeep. One, uh, hedge losses in the top line. There is a... Almost
the hedge losses in the top line have doubled, which is all reported in INR. So from 15 crores
last quarter, we are sitting at 30 crores this quarter. So that is one line item which impacts our,
uh, uh, reported revenue number in either currency. I mean, the table would have been
otherwise much, much higher in terms of rupee terms if the hedge losses were not there in the
top line. So that, that is-

00:38:25,360 --> 00:38:27,520 [speaker_10]

That is... Yeah. That is a 50 basis points reduction.

00:38:27,720 --> 00:39:01,680 [speaker_4]

That's one. Second is, the exposure to pound and euro is very significant in our case, and, uh,
over there, there was a headwind rather than a tailwind because of which, uh, the, be- between
dollar and pound, there was a significant tailwind because of which the dollar revenue went
down. And the third thing is because of the India business, uh, g- growing this quarter. So these
are three re- reasons because of which the, um, dollar number is lower as compared to (audio
cuts out) and then rupee number is higher.

00:39:01,760 --> 00:39:35,760 [speaker_10]

Okay. The second question... But thanks for that, uh, Saurabh. The second question that I had is
around the headcount addition versus the revenue. Um, so your utilization rates have not
changed quarter on quarter, right? Your headcount addition is fairly moderate actually, and
your revenue growth is 6%. So I'm just trying to understand the, the gap in the headcount
addition versus the strong revenue growth with an unchanged utilization. Is there a big bump
up in the subcontracting cost or is non-linearity really at play over here?

00:39:36,220 --> 00:40:35,240 [speaker_4]

So I think two parts again. One, you look at revenue per headcount has gone up in the current
quarter from 67-odd thousand dollars per annum to 69,000. So there is non-lea- linearity which
is getting played out. Number two, uh, uh, the headcount addition that you're looking at
between two quarters is a point-in-time view. But when you were ramping up last quarter, the
headcount was added towards the end of the last quarter. There was no full quarter revenue
that had come for those people. That is why you're seeing that the, um, the headcount increase
is only 2%, wherein the FT increase at the same utilization is much larger than that. So that's
second point to it. And subcon is not playing a num- uh, impact here because it's already
included in the overall headcount. So it's not because of the subcon that the, uh, the, the, uh,
headcount has reduced or has not grown that significantly. So that's the reason.

00:40:35,260 --> 00:41:17,320 [speaker_10]

Right. The final question is on the, the hedging philosophy. Now normally, uh, I mean, you
know, what I see with companies is that when they have an annual cycle, they want to lock in
their currency rates at the beginning of the year so they run a rolling 12-month, uh, hedge and
they also run balance sheet, uh, hedges, yeah? Uh, when I look at your hedging, right, I just get
a little bit, uh, what I would say, I'm unable to draw a pattern, uh, uh, you know, behind the
hedging because, uh, it's more than doubled on a YOY basis for USD on a sequential basis as
well it's gone up. And, uh, the hedge duration seems to be of a far shorter duration. So what's
the underlying mechanics and the philosophy behind the hedging here?

00:41:17,380 --> 00:41:59,840 [speaker_4]

So one thing, Signity was added. Signity, uh, until now, they were not hedging. As a legal entity,
they never used to hedge. So hedges for Signity have been taken. As far as our hedging policy
is concerned, it is very straightforward. We hedge on rolling four-quarter basis, which is 90% of
the net exposure for the immediate quarter followed by 80, 70, 60. So the bump up that you
see in hedging is, is because a large business getting added, Signity and the other acquired
businesses that we have taken over, and the policy remains same, it is 90, 80, 70, 60. And
that's why you see that a lot is short term just because of new entity getting added and, uh, in
the overall, uh, he- hedging policy.

00:41:59,880 --> 00:42:03,800 [speaker_10]

Fantastic. Uh, thanks a lot for all the clarification, Saurabh, and congrats team.

00:42:03,840 --> 00:42:06,300 [speaker_4]

Yeah, thanks for the question.

00:42:06,340 --> 00:42:21,930 [speaker_0]

Thank you. We take the next question from Prateek Maheshwari of HSBC Securities. Please go
ahead. Um, Mr. Prateek Maheshwari, could you please unmute your microphone and ask your
question?

00:42:23,020 --> 00:43:05,448 [speaker_9]

Hi guys, um, thank you for the opportunity. Um, uh, very impressed with the all-around
performance, uh, especially with the margin improvement and the improvement in the FCF
generation quarter-on-quarter basis. Uh, just, uh, thank you for the comments on FCF
generation. Just wanted to understand how I think you guys said about how you guys plan, uh,
for the first half, second half of this year and then how do you plan for the FCF generation to
improve in the next year as well? And the other question I had was, uh, on your growth.... I
think probably you also discussed the five billion plan, uh, Pfizer out. I just wanted to
understand that, um, how do you guys see that with your present verticals and if you would
need, uh, to add any verticals for that kind of growth?

00:43:06,648 --> 00:43:29,228 [speaker_2]

Uh, thank you for the question, Pratik. Jon and I will take them together. Uh, uh, we haven't
given any timeline for hitting $5 billion. Uh, all we've maintained and we continue to maintain is
that we will deliver sustained, robust, and profitable growth. The intent, of course, uh, is to
grow at the fastest possible clip. Uh, Jon, do you want to add anything to that?

00:43:29,268 --> 00:43:53,588 [speaker_3]

Only thing I'd add is, and I think you alluded to it on your commentary earlier on, which is w-
uh, the, the, the placement of Codeforce with its execution mi- uh, mentality, along with its
engineering prowess and how we see this aligned with AI, will really drive, um, our business,
the value we deliver to our customers exponentially over the n- the coming years.

00:43:53,608 --> 00:43:57,688 [speaker_2]

Pratik, uh, that's how we would answer the questions. Is there anything else we can answer for
you?

00:43:57,748 --> 00:44:00,008 [speaker_9]

No, thank you so much, uh, Sudhir.

00:44:00,068 --> 00:44:02,608 [speaker_2]

Thank you, Pratik.

00:44:02,668 --> 00:44:09,228 [speaker_0]

Thank you. Our next question is from Sumeet Jain, uh, from CNSA. Please go ahead.

00:44:10,648 --> 00:44:44,188 [speaker_11]

Uh, yeah, hi. Thanks for the opportunity. Uh, so question for you, Sudhir. I mean, you said that
you are seeing demand improving on the margins, but can you just highlight, is it for Codeforce
or for the overall industry? Um, that's one. And secondly, you know, do you believe AI is
actually a headwind or a tailwind for the IT services industry? And one question for Saurabh in
terms of ETR. I mean, we can see the tax rate is pretty volatile quarter to quarter, so what are
you expecting for the full year this year and probably next year as well?

00:44:44,228 --> 00:44:45,168 [speaker_2]

Saurabh, would you like lead?

00:44:45,228 --> 00:45:21,368 [speaker_4]

Yeah. So, um, uh, uh, Sumeet, uh, ETR on a sustained basis is roughly 23.5% or 24... 23.5% to
24% is what a sustained ETR is what we would maintain. Last quarter, there were certain
transactions, uh, uh, AdvantageGo-related, certain things that happened because of which,
when we carved that out, so there were certain tax benefits we got because of that. And that's
why the ETR was at 17%. But on an ongoing basis, without any one-off benefit coming in, uh,
we would believe that 23.5%, 24% is the number one should base in the model.

00:45:22,928 --> 00:46:34,717 [speaker_2]

Uh, coming back to your earlier question around the demand. Uh, a- as I, as I, as I shared, um,
uh, demand is, from our vantage, clearly increasing, uh, on the margins. And we play in the
same sandbox that the other players do, so, so we believe that for folks who have the right set
of offerings, demand should be increasing on the margin for them as well. We believe that AI is
a clear tailwind for firms that understand the domain and also have an appreciation for how to
apply the relevant AI-specific technology. There can be no better example of this than the fact
that the velocity of our large deals, despite the macros, continues to increase very, very
appreciably. As I had noted earlier, at the end of the first two quarters, the first half of this year,
we've already locked in 10 large deals. If you were to contrast that, we had a number of only 14
for all of last year. So that's how I would, I would, I would represent, uh, the response to both
questions. Jon, would you like to add to that? (laughs)

00:46:34,808 --> 00:47:19,488 [speaker_3]

Yes. (laughs) I, I would like to, um, corroborate with what Su- Sudhir said about being a tailwind.
I think, I think people have underestimated the complexity of im- implementing AI across the
enterprise. Yes, you can build POC here and there, but actually get real value out of it needs
deep, deep engineering prowess across the whole infrastructure, from cloud, cloud data, and
then the, obviously, the tooling of actually inter- using that data into your LLMs, your SLMs, uh,
and so on to actually derive insights and value. So for us, I think it's, it's a great situation to be
in.

00:47:20,768 --> 00:47:24,348 [speaker_2]

Sumeet, uh, those were the answers. Do you have anything else for us?

00:47:24,548 --> 00:47:58,448 [speaker_11]

Yeah, just one more extension of this. I mean, like, you have already reported a very strong
revenue per employee metric improvement at around $70,000 per annum in this quarter. And
I'm sure, I mean, there are different, different kind of projects where the AI penetration is
slightly higher in certain projects, while lower in other. So, do you see this revenue per
employee moving at a significant pace over the next two, three years, uh, which is an important
metric to track, to judge the, the, uh, the advancement of an IT services company on the AI
front?

00:48:00,488 --> 00:48:48,068 [speaker_2]

Early days in our view, Sumeet, early days, but, uh, we think, uh, given the success of the Code
Insight platform around legacy modernization reverse engineering that we've built, and the
demand that's coming our way, given the clear draw for the Evolvops platform in the cloud and
the infra management space that we've been looking at, and given the very clear success of
the Blueswan, uh, QEAI platform that was something that we acquired with the Signity
acquisition, we think RPE should continue trending upwards. But I... As I said at the outset, still
early days. I think the jury's out on it. We'll have possibly something more definite for you over
the next two or three quarters.

00:48:48,128 --> 00:49:12,915 [speaker_11]

No, got it. And maybe one last question, if I can squeeze in. I mean, if I see the Signity numbers,
which were reported separately this quarter, even they had a good sequential [Link] can
you maybe briefly highlight like how long do you see that cross-selling, up-selling opportunity in
the Cignity being still applicable for you? And is the growth ambitions in healthcare retail
vertical primarily on the back of that in the next one year?

00:49:14,336 --> 00:50:29,035 [speaker_4]

So, as, as we reflect back as a team, uh, Sameer, we think that one of the best things and one
of the best decisions that we ever made as a team over the last nine years was the Cignity
acquisition. You will recall that we got a lot of flak for that acquisition, going into that
acquisition. But as we look back, as we look at the current pipeline, the largest deal that we are
pursuing today as we speak is a deal with a client that came into our client portfolio from
Cignity. Two out of the top three clients of Cignity that we acquired over the last five quarters,
we've already signed large deals within that portfolio. And not only did we get an outstanding
set of leaders, I, I do want to point this out. This is a... An acquisition isn't just about getting the
clients in. Today, if you look at our chief marketing officer, he's come in from Cignity. Today, if
you look at our data automation leader, he came in from Cignity. Today, if you look at the QE
practice head of the firm, he came in from Cignity. It's been a fantastic integration, uh,
acquisition from our vantage. And that business, along with the cross-sell that you alluded to, is
likely to keep on getting strong.

00:50:29,955 --> 00:50:33,055 [speaker_11]

No, got it. That's very helpful and all the best to you.

00:50:33,096 --> 00:50:35,075 [speaker_4]

Thank you.

00:50:35,116 --> 00:50:41,475 [speaker_0]

Thank you. Our next question is from Sandeep Shah of EkRaja Securities. Please go ahead.

00:50:41,575 --> 00:51:02,575 [speaker_12]

Yeah, thanks. Yeah, thanks for the opportunity. And congratulations on a strong execution this
quarter on many fronts. Uh, just wanted to understand a few things about margin. So when you
plan to give a wage hike or this time it may not be there because we have distributed some
bonus in, in the first quarter?

00:51:04,856 --> 00:51:10,975 [speaker_4]

We already announced a wage hike effective 1st of October, Sandeep. For the entire
organization.

00:51:11,015 --> 00:51:15,796 [speaker_12]

Okay. And how does that will impact the margin in the coming quarters?

00:51:15,856 --> 00:51:47,015 [speaker_4]

Saurabh. So, uh, uh, Sandeep, uh, we're not, uh, giving quarter-on-quarter margin guidance,
but historically, we have had anywhere, uh, a drop of under 250 basis point, uh, on the wage
hike. And then, there are other levers wherein ESOP costs will go down, depreciation and
amortization as a percentage of revenue will go down. There will be levers to offset partially the
impact of wage hike. So, that is how we're looking at, uh, quarter three phasing out.

00:51:47,116 --> 00:52:21,955 [speaker_12]

Okay. Okay. So most of the other questions they've answered, just some bookkeeping
questions. Uh, Saurabh, when I look into the disclosure of interest expense, which is beside the
lease discounting, if I look at the average interest expense divided by the average debt, it
comes to 25, 27%. And if I apply same on interest income as percentage to the cash and bank
balance, it comes less than 3%. So, uh, can you make us understand, uh, how this has been
calculated while, uh, the interest expense looks very high?

00:52:22,395 --> 00:53:05,435 [speaker_4]

No. No. Sandeep, that's a wrong calculation. I mean, you don't look at the year end or quarter
end, period end, uh, loan amount and arrive at the interest cost basis. That there is a, uh,
consumption of our working capital utilization that happens through the quarter, it's a point in
time view. It is not the average utilization of the working capital because it's not a long-term
debt that we have in the balance sheet. It is a working capital, it goes up through the quarter,
and then as we start collecting on money, the, the, the, the working capital limit goes down. So
the, uh, that is why the interest calculation cannot be done just looking at the balance sheet
because it's a point in time view.

00:53:05,535 --> 00:53:18,854 [speaker_12]

Okay. Okay. And Saurabh, uh, just to get more understanding, what is this nature of discounting
income on long-term customer contracts and income from mortgage business? You might have
explained in the earlier calls, but just-

00:53:18,915 --> 00:53:19,086 [speaker_4]

Yeah.

00:53:19,095 --> 00:53:21,055 [speaker_12]

... quickly if you can make us understand.

00:53:21,076 --> 00:53:43,756 [speaker_4]

So, discounting income is basically a long-term contract wherein you're, uh, recognizing part of
the revenue now and you're supposed to bill, say, 100 dollars to a customer one year down the
line, or you're going to collect 100, 100 dollars from a customer one year down the line. So
today, when you recognize revenue, you recognize 90, and balance 10 rupees accretion
happens in other income.

00:53:43,836 --> 00:53:44,205 [speaker_12]

Okay. Okay.

00:53:44,515 --> 00:53:52,975 [speaker_4]

100 we go and set as your unbilled revenue. So your unbilled revenue will show 100. Your
unbilled on the balance sheet side, revenue-

00:53:53,435 --> 00:53:54,305 [speaker_12]

Yeah.

00:53:54,336 --> 00:53:56,395 [speaker_4]

... will be 90, 10 will be other income.

00:53:57,015 --> 00:54:01,915 [speaker_12]

Okay. Okay. And, uh, just a explanation on income from mortgage, if we can-

00:54:01,935 --> 00:54:04,636 [speaker_4]

Same thing, same transaction.

00:54:04,736 --> 00:54:06,765 [speaker_12]

Okay. It's for the long-term contract?

00:54:06,776 --> 00:54:08,076 [speaker_4]

Yes.

00:54:08,176 --> 00:54:10,276 [speaker_12]

Okay. Okay. Thanks and all the best.

00:54:10,316 --> 00:54:11,256 [speaker_4]

Yes, thanks.

00:54:12,535 --> 00:54:19,935 [speaker_0]

Thank you. We take our next question from Sulabh Govila of Morgan Stanley. Please go ahead.

00:54:20,455 --> 00:54:21,955 [speaker_13]

Yeah. Hi, am I audible?

00:54:21,995 --> 00:54:22,895 [speaker_4]

Yeah. Yeah, Sulabh.

00:54:23,656 --> 00:55:08,015 [speaker_13]

Yeah. Thanks for taking my question, and, uh, congrats on a good quarter. Uh, I just had one
question, uh, uh, related to the deal wins and the executable order book. So in the last two,
three quarters, while we've had, um, a run rate of 500 million odd on the deal wins front, uh,
excluding the large deal from Sabre that we won, um, the, the, the increase in the executable
order book this quarter has been, you know, quite sharp related to past few quarters. So, so just
trying to understand what has led to that. Um, is it, is it, uh, more of a quarterly phenomenon or
would you, uh, say that you've seen, uh, ten- tenure of deals going down this particular
quarter?

00:55:12,726 --> 00:55:44,806 [speaker_4]

No. So, uh, uh, Sulabh, so see, eh, eh, one, it is a function of the deals that are getting signed
outside of the large deals also. Plus, the deals which have been signed in the previous quarter,
when they start ramping up, the next 12 month revenues have started picking up. So, it is a
function of the deals which were signed in the previous quarter, and the current quarter, and
the ramp-up getting stabilized because of which you are seeing the pick up in the total 12
month executable order book. It's not just the impact of the deals signed in the current quarter.

00:55:45,826 --> 00:55:48,815 [speaker_13]

Okay. So, so, so it -- there's no change in the tenure of the deal-

00:55:48,906 --> 00:56:09,566 [speaker_4]

There's no change in the tenure of the deal. It's not that we've started moving to shorter t- term
deals or, uh, anything of that sort. It's just that deals which were signed in the previous quarter
and say, towards the back end of the previous quarter, they started ramping up in the current
quarter, but not fully ramped up. So, when it -- you sit in the current quarter without any
increase in order to intake, the 12 month revenue has gone up.

00:56:10,726 --> 00:56:12,446 [speaker_13]

Understood. Thanks for taking my question.

00:56:12,506 --> 00:56:14,386 [speaker_4]

Yes, thanks.

00:56:14,426 --> 00:56:21,506 [speaker_0]

Thank you. We take our next question from Ashwin Mehta of Amrit Capital. Please go ahead.

00:56:22,486 --> 00:56:44,126 [speaker_14]

Uh, yeah, thanks for the opportunity. Just one question. Uh, so any sense on the, uh,
contribution from Sabre this quarter? Are we at steady state here or, uh, further ramp-up is
expected in 3Q? Uh, and, uh, did we take over any people in this, uh, deal in this quarter or
most of it was done in 1Q itself?

00:56:44,186 --> 00:56:53,486 [speaker_4]

Ashwin, we're at steady state. We don't expect any further ramp-up from, uh, Sabre. And there
is, uh, the rebadging exercise is completely over.

00:56:53,586 --> 00:57:18,506 [speaker_14]

Okay. Thanks, Sudhir. And just one, one, uh, more question in terms of margins. So given that
we have, uh, a margin impact of wages in the next quarter, which you'll try to, uh, counter
through the other measures, uh, uh, what we seem to be then indicating is that there'll be a
pretty smart improvement in margins in the fourth quarter for us to be at the 14% levels. Uh,
would that be the right understanding?

00:57:18,566 --> 00:57:19,486 [speaker_4]

That's the intent.

00:57:19,506 --> 00:57:19,576 [speaker_14]

Yeah.

00:57:19,576 --> 00:57:23,946 [speaker_4]

That's the intent. That's what we are attempting to do, uh, Ashwin.

00:57:24,006 --> 00:57:26,746 [speaker_14]

Sure. Uh, thanks, Sudhir, and all the best.

00:57:27,846 --> 00:57:33,466 [speaker_0]

Thank you. Our next question is from Ravi Menon of Macquarie. Please go ahead.

00:57:33,506 --> 00:58:02,126 [speaker_15]

Hi. Thanks for the opportunity. Hi. Thanks for the opportunity, and congrats on a pretty good
quarter. Uh, yeah, good to see this broad-based growth and really good to see EPS, uh, growth
as well. Uh, you know, uh, EMEA seems a little soft, uh, in especially the order intake also. Uh,
what is your sense on that? Uh, and the rest of the world seems really good. Uh, so w- which
geographies are, uh, which countries specifically within the rest of the world portfolio is doing
well? Or which, uh, verticals are doing well?

00:58:02,206 --> 00:58:24,546 [speaker_2]

Sure. So, uh, John can answer the question around EMEA and the demand outlook for EMEA that
we see. I will -- I can tell you that from our vantage, Australia and New Zealand, Asia Pacific,
Middle East have not just done well, they continue to trend in a very positive direction. And we
feel extremely bullish about those GEOs and the teams that we have put [Link], your
view on EMEA?

00:58:24,586 --> 00:59:02,086 [speaker_3]

Uh, what we're seeing in, uh, in, in EMEA is, um, over the last couple of quarters, the -- there's
sort of -- there's been delays and, and slowdowns in, um, new op- uh, opportunities and sign-off
of, of deals. But we're seeing that actually recovering, um, and we, we are expecting, um,
significant, uh, upside over the next, uh, two quarters as deals, deals come to be -- th- they're
having to be closed. So, there, uh, we see a positive uptick both across insurance, we see a, a
lot of pent-up demand. And also public sector with, uh, decisions from the government actually
starting to flow through.

00:59:02,126 --> 00:59:23,866 [speaker_15]

Great. Thanks for that. Uh, yeah. So I have just a question about the unbilled revenue increase.
Uh, you know, should we link this to the Sabre deal? And, you know, is this why you seem to be,
uh, confident that, you know, uh, free cash flow to PAT, uh, will be, uh, in a good 70 to 80%
range, uh, you know, over the longer term? Uh, when should we start seeing this come down?

00:59:23,906 --> 01:00:23,466 [speaker_4]

So DSO unbilled that you see right now, uh, Ravi, is, uh, is not increasing just because of Sabre.
There are any development contract that you sign up and any large contract that you sign up,
there is upfront effort that goes in and there is a requisite billing milestone, which when
achieved, the billing happens. So it's also a timing difference wherein when you re- receive
approval from the customer and when you bill it. I think the way we are looking at the overall,
uh, metric when it comes to cash or the balance sheet is that focus on FCF to PAT and deliver
anywhere around 75 to 80 and keep having a double digit growth. So, I think that's the focus
and, uh, the investments will keep going into customers as long as we continue to grow, but if
we are maintaining FCF to PAT, that keeps giving us comfort.

01:00:23,506 --> 01:00:45,266 [speaker_15]

Right. Thanks. Uh, well, I've seen a nearly 17 million dollars increase in the long term, uh, you
know, unbilled revenue, uh, quarter on quarter. Uh, so I was just wondering, uh, in absolute
terms now, you know, we have added nearly 53 million, uh, to the long term unbilled revenue,
uh, year on year. Uh, so when would that start reducing? Uh, like should we think about that as
a de-limits rate for Sabre or something like that?

01:00:46,986 --> 01:01:23,566 [speaker_4]

No. So see, again, it is not just Sabre. There are multiple contracts. The long term unbilled has
always been there. It was there previous quarter. It was there quarter before that as well. So it's
not just because of Sabre. There is increase in liability as well. So this number, as long as the
overall number, as I said again, the overall number FCF to PAT is maintained between 75 to 80,
we'll be comfortable because if that happens, something or the other is being taken care of. We
would want to make sure that FCF to PAT is getting converted at 75 to 80%, and that's about it.

01:01:23,626 --> 01:01:34,836 [speaker_15]

Right. Thanks so much. And one last thing. Okay. Just a clarification. Uh, so, uh, John has
actually been added to the board. Uh, John, congrats on that. Uh, I saw that, uh, Gautam seems
to have resigned. Uh, so is he no longer on the board?

01:01:36,026 --> 01:01:46,366 [speaker_2]

No, we, uh, shared that earlier as well and there was, uh, an intimation sent to the target chain.
Gautam is no longer with us, uh, and we had shared that immediately after the last board
meeting.

01:01:46,446 --> 01:01:48,996 [speaker_15]

Okay. Thanks so much, Sudhir. Best of luck.

01:01:50,966 --> 01:01:59,786 [speaker_0]

Thank you. We take that as the last question for today. I now hand over the floor back to the
management team for closing comments.

01:01:59,826 --> 01:02:21,406 [speaker_2]

Thank you, Indra. And, uh, ladies and gentlemen, thank you very, very much for, uh, for your
time and for your interest. Uh, we've said this over the last nine years, we really value these
conversations, interactions, and we take away very rich learnings from them. Uh, we look
forward to staying in touch and we look forward to speaking with you again at the end of the
next quarter. Thank you. Have a great day.

01:02:21,466 --> 01:02:47,506 [speaker_0]

Thank you, members of the management. Ladies and gentlemen, on behalf of Coforge Limited,
that concludes today's conference. Thank you for joining us. You may now click on the Leave
icon to exit the meeting. Thank you for your participation.