Shares of Coforge rose over 2% in early trade on Monday after the IT services company announced a major strategic move — the acquisition of Silicon Valley–based AI firm Encora in a deal valued at $2.35 billion.
The stock climbed to an intra-day high of ₹1,711 on the NSE before trimming gains. Despite the bounce, Coforge shares have been under pressure recently, declining over 9% in the past week and more than 11% over the last month. On a year-to-date basis, the stock is down around 12%.
All-Stock Deal to Build AI Muscle
The acquisition will be completed through an all-stock transaction, with Coforge issuing preferential shares worth approximately $1.89 billion to Encora’s existing shareholders. These include private equity firms Advent International and Warburg Pincus. Once the deal closes, Encora’s shareholders will collectively own about 20% of Coforge’s expanded equity base.
The agreed transaction price implies a share value of ₹1,815, representing an 8.5% premium to Coforge’s previous closing price.
Strategic Push Into AI-Led Engineering
Commenting on the acquisition, Coforge’s CEO and Executive Director Sudhir Singh said the deal significantly strengthens the company’s AI-led engineering capabilities. He noted that the combined platform will help enterprises build data cores and cloud foundations specifically designed for artificial intelligence workloads.
Encora, an AI-native software engineering firm, is expected to generate around $600 million in revenue in FY26, with an adjusted EBITDA margin of roughly 19%.
Creating a $2.5 Billion Tech Powerhouse
According to Coforge, the acquisition will transform the group into a $2.5 billion technology services platform, with AI-led engineering, cloud services, and data engineering expected to contribute nearly $2 billion in revenue by FY27.
The company estimates that:
- AI-led product engineering could become a $1.25 billion+ business
- Cloud services may scale to $500 million
- Data engineering could add another $250 million
In addition, Coforge said its Hi-Tech and Healthcare verticals will gain immediate scale post-acquisition, with each expected to operate at an annualised revenue run rate exceeding $170 million.
Financing and Market Position
The transaction will also involve a bridge loan or qualified institutional placement (QIP) of up to $550 million to refinance Encora’s existing debt.As of December 29, Coforge’s market capitalisation stood at approximately ₹56,700 crore, reflecting investor optimism around the long-term strategic benefits of the deal despite near-term stock volatility.
