1. At a Glance
Cigniti is India’s largest pure-play software testing company and is now being merged into Coforge Ltd after a 54% stake acquisition. High ROEs, lean debt, and export-led margins make it a tasty tech snack — but with merger spices added.
2. Introduction with Hook
Imagine being the guy who checks everyone’s homework but never gets credit. That’s Cigniti — the backend QA wizard ensuring your flight booking app doesn’t crash mid-air.
- ROE: 26%
- 3Y EPS CAGR: 34%
- FY25 Net Profit: ₹200 Cr
From Hyderabad to 2,000 Cr+ topline, Cigniti turned “testing” into “trust.”
3. Business Model (WTF Do They Even Do?)
Cigniti operates in:
- Software Testing & QA: Functional, regression, performance testing (aka: making sure software doesn’t throw tantrums).
- Digital Assurance: Testing for cloud, AI/ML apps, and IoT environments.
- Next-gen Offerings: Predictive analytics in testing (Testimony, BlueSwan).
- Industries: BFSI, Healthcare, Retail, Airlines — aka industries where one app crash = shareholder heart attack.
Revenue model = time & material + fixed price contracts.
Export heavy = FX juice.
99% of revenue from international clients.
4. Financials Overview
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue (₹ Cr) | 1,648 | 1,815 | 2,014 |
| EBITDA (₹ Cr) | 238 | 222 | 289 |
| EBITDA Margin (%) | 14% | 12% | 14% |
| Net Profit (₹ Cr) | 168 | 166 | 200 |
| EPS (₹) | 59.92 | 60.66 | 73.06 |
| ROCE (%) | 38% | 31% | 34% |
| ROE (%) | 27% | 26% | 26% |
🧾 P.S.: Zero debt. Just vibes.
5. Valuation
Let’s try breaking the matrix.
- EPS FY25: ₹73
- Median P/E (Peers): 30x (Infosys dreams, but grounded in Tier 2)
- FV Range: ₹1,900 to ₹2,300
Post-merger synergies with Coforge may push it higher… unless integration issues eat margin pancakes.
6. What’s Cooking – News, Triggers, Drama
🔥 The Coforge Saga
- May 2024: Coforge bought 32.47% from promoters
- Jul 2024: Coforge made open offer, increased stake to 54%
- Dec 2024: Merger approved
- May 2025: Export incentives write-off of ₹30 Cr and merger transition costs
Other drama:
- Multiple director resignations (classic M&A turbulence)
- EPS still jumped 21% YoY in FY25 despite chaos.
Merger = scale + topline synergy
Risk = Coforge digestion + culture clash + client retention
7. Balance Sheet
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Equity Capital (₹ Cr) | 27 | 27 | 27 |
| Reserves (₹ Cr) | 562 | 711 | 936 |
| Borrowings (₹ Cr) | 56 | 57 | 28 |
| Total Assets (₹ Cr) | 846 | 1,006 | 1,239 |
Key Points:
- Borrowings halved in FY25.
- Net cash position positive.
- Asset-light model, with rising investments (read: they’re deploying idle cash).
8. Cash Flow – Sab Number Game Hai
| Year | CFO (₹ Cr) | CFI (₹ Cr) | CFF (₹ Cr) | Net Flow (₹ Cr) |
|---|---|---|---|---|
| FY23 | 157 | -53 | -69 | +35 |
| FY24 | 129 | -34 | -40 | +56 |
| FY25 | 160 | -18 | -18 | +125 |
Cash-rich and stingy on dividends = war chest mode. Also, CFO > PAT = high earnings quality.
9. Ratios – Sexy or Stressy?
| Ratio | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROE (%) | 27 | 26 | 26 |
| ROCE (%) | 38 | 31 | 34 |
| Debtor Days | 57 | 64 | 74 |
| Working Capital Days | 48 | 54 | 110 |
| Dividend Payout (%) | 9 | 5 | 0 |
🧠 Working capital spiked — not cool. But they’ve historically reined it back. Let’s give them a yellow card, not red.
10. P&L Breakdown – Show Me the Money
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Sales (₹ Cr) | 1,648 | 1,815 | 2,014 |
| Operating Profit | 238 | 222 | 289 |
| Net Profit (₹ Cr) | 168 | 166 | 200 |
| EPS (₹) | 59.92 | 60.66 | 73.06 |
| OPM (%) | 14% | 12% | 14% |
Margins bounced back after FY24 dip. FY25 = clear execution despite merger mayhem.
11. Peer Comparison
| Company | Market Cap (₹ Cr) | P/E | ROE (%) | Net Profit (₹ Cr) | OPM (%) |
|---|---|---|---|---|---|
| L&T Tech | 46,098 | 36.4 | 22.1 | 1,265 | 17.1 |
| Tata Tech | 29,798 | 43.5 | 19.9 | 685 | 17.6 |
| Cyient | 14,479 | 23.6 | 12.8 | 613 | 15.5 |
| Netweb Tech | 11,088 | 96.8 | 24.0 | 114 | 13.9 |
| Cigniti | 4,860 | 22.0 | 26.0 | 200 | 14.0 |
High ROE, low valuation = value unlocking in process. Once merged, Coforge may re-rate Cigniti’s embedded margin engine.
12. Miscellaneous – Shareholding, Promoters
- Promoter Holding:
- Dec 2023: 32.77%
- Mar 2025: 55.16% (Coforge now the daddy)
- FIIs:
- From 0.7% in 2022 to 9.73% in 2025
- They smell synergy before we smell revenue.
- Public Holding:
- Down to 24.5% – float tightening.
🚨 Insider Alert: Director and CEO exits & entries post-merger are either cleanup… or chaos. Jury’s out.
13. EduInvesting Verdict™
Cigniti’s story is no longer about independent QA glory. It’s now Coforge’s testing arm. But here’s the real juice:
- Margin bounce-back in FY25.
- Cash flow robustness.
- Valuation discount vs peers.
- FII accumulation = Smart Money nod.
- Coforge likely to integrate fast and cross-sell.
This ain’t a stock anymore. It’s a strategic asset.
Metadata
– Written by EduInvesting Analyst | 17 July 2025
– Tags: Cigniti Technologies, Coforge Merger, QA Services, Tech Stocks, NSE Microcaps
