Coforge to acquire Encora: how this 2.35 billion dollar AI deal reshapes a mid-tier Indian IT firm into a 2.5 billion dollar digital engineering powerhouse for global enterprises and investors
This long-form analysis explains what Coforge’s planned all-stock acquisition of US-based Encora means for CIOs, CDOs, product leaders, digital and AI transformation heads, employees and equity investors who want to understand whether this is a step change or just another IT services deal. It focuses on use cases such as “how will this change Coforge’s AI and digital engineering capabilities”, “what does the deal mean for North America clients”, and “should long-term investors care about this acquisition”.
Table of contents
- Who this deal matters to
- Deal overview and structure
- Strategic fit and AI engineering focus
- Impact on verticals, geography and scale
- Ownership, governance and private equity role
- Coforge’s business model before Encora
- Financial impact, synergies and funding
- Market context and competitive positioning
- Key risks and what investors should watch
- What the Encora deal signals about Coforge’s future
- FAQs
For enterprise technology and business leaders, the Coforge Encora combination matters because it aims to create a scaled AI native digital engineering partner capable of taking AI projects from prototype to production across product, data and cloud estates.
For investors in Indian IT and mid-tier global technology services, this is one of the largest engineering research and development style acquisitions by an Indian firm and could reset how mid-caps play the AI services race, traditionally dominated by larger incumbents.
For product and platform companies in hi tech, healthcare, fintech and software as a service, Encora’s existing AI-led product engineering capabilities plugged into Coforge’s domain-rich services offer a single partner for full-stack digital, engineering and managed run services across time zones.
The transaction values Encora at about 2.3–2.35 billion dollars, roughly ₹17,000 crore, making it one of the biggest all-stock acquisitions by an Indian IT company in the digital engineering and AI space.
Encora is projected to deliver around 600 million dollars of revenue in FY26 with an adjusted EBITDA margin of roughly 19 percent, positioning it as a sizeable AI native product engineering asset.
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Coforge will fund around 1.89 billion dollars of equity value by issuing approximately 93–94 million new shares at a price of about ₹1,815 per share, resulting in Encora’s current shareholders owning close to 20 percent of the enlarged company.
The balance of up to 550 million dollars will be raised through a bridge loan or a qualified institutional placement to retire Encora’s term loan and optimise the capital structure of the combined entity.
Regulatory, shareholder and competition approvals remain pending in India and overseas, and closure is expected around four to six months after the announcement, subject to customary conditions.
The core intent of the deal is to create a 2.5 billion dollar technology services powerhouse anchored in AI-led engineering, cloud and data capabilities rather than simply adding more headcount or incremental traditional IT revenue.
Encora brings deep expertise in AI native product engineering, data engineering, cloud native development and platform build work for software-driven, hi-tech and healthcare clients, directly complementing Coforge’s strengths in banking, insurance and travel.
Coforge has historically competed on domain-rich transformation work across banking and financial services, insurance and travel, transport, hospitality, with strong practices in application development, engineering, data and intelligent automation.
By layering Encora’s product engineering DNA and its own composable AI platform assets on top of Coforge’s enterprise data, cloud and automation work, the combined firm aims to offer full-stack AI solutions from consulting and design to build, modernise and run.
Management has called the acquisition a “defining moment, arguing that it creates an AI-led engineering capability moat and a roughly 2 billion dollar “enterprise core” of AI, data and cloud services inside a 2.5 billion dollar company.
Vertical scale
Encora significantly deepens Coforge’s presence in hi tech and healthcare, two verticals that were earlier smaller but strategically important in its portfolio.
Post acquisition, both hi tech and healthcare are expected to operate at an annualised revenue run rate of more than 170 million dollars each, turning them into material peers to banking, insurance and travel.
Encora adds at least eleven clients with annual spends above 10 million dollars, expanding Coforge’s roster of large strategic accounts and providing cross-sell opportunities across AI, data and cloud services.
Geographic presence
Coforge already derived around 60 percent of its revenue from North America and about 30 percent from Europe, even before the Encora transaction.
Adding Encora is expected to increase the firm’s North America revenue by roughly 50 percent to about 1.4 billion dollars, with particular strengthening in US West and Midwest technology and healthcare hubs.
Near-shore delivery footprint
A key operational benefit is Encora’s near-shore presence, which brings over 3,100 engineers and specialists in Latin America, delivering time zone-aligned agile product engineering and AI services for US clients.
This near-shore capacity helps Coforge serve clients that prefer blended delivery models combining India, Latin America and onshore resources for regulatory, collaboration or innovation reasons.
Scale shift
Coforge had already been using mergers and acquisitions as a scaling lever, including the acquisition of Cigniti to strengthen quality engineering and digital assurance and several deals in 2025 to move towards a 2 billion dollar target.
The Encora buyout accelerates this ambition by pushing the combined entity towards 2.5 billion dollars in annual revenue and repositioning Coforge as a mid tier global tech services player with a clearly articulated AI engineering angle.
Coforge was originally NIIT Technologies before Baring Private Equity Asia, now part of EQT, acquired control, rebranded it and gradually reduced its stake, resulting in a diversified shareholding with strong institutional participation.
Encora was majority owned by Advent International, which had purchased it from Warburg Pincus; both private equity firms will now roll their stakes into Coforge through the share swap, becoming significant minority shareholders in the enlarged company.
After completion, Encora’s selling shareholders are expected to hold around one-fifth of the expanded equity and will have rights to nominate directors to the Coforge board and to key committees, formalising their governance role.
Despite the introduction of new large shareholders, Coforge has stated that the existing leadership team, led by CEO Sudhir Singh, will retain operational control and be accountable for strategy and integration.
Encora’s own leadership, including CEO Anand Birje, and its founding and management network with deep experience in US tech and prior Indian IT majors, is expected to be a crucial asset during integration and subsequent growth.
Understanding Coforge’s pre-deal business model helps stakeholders assess how Encora changes the revenue engine and risk profile.
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Coforge generates most of its revenue from IT services, including digital engineering, application development and maintenance, cloud and infrastructure, business process management, data and integration and intelligent automation delivered to enterprises undergoing digital transformation.
Revenue mix by vertical and service
Banking and financial services contribute around 31–32 percent of revenue, insurance about 21–22 percent and travel transport hospitality roughly 18 percent, with the rest spread across manufacturing, public sector and emerging verticals such as healthcare and hi tech.
By service line, engineering and application work accounts for a large share, with additional contributions from cloud and infrastructure services, business process management and data and automation offerings.
Geographic concentration
Coforge’s revenue profile is heavily anchored in North America and Europe, giving it access to large IT spending pools while maintaining some diversification across markets and currencies.
Business model characteristics
The business has been built around high-value, domain-intensive engagements in a limited set of verticals where Coforge aims for deep client intimacy, annuity-style deals and cross-selling opportunities rather than commoditised time and material work.
Encora’s product engineering centric book of business aligns with this focus but increases exposure to hi tech and software native clients, which rely on recurring engineering, platform and AI development partnerships.
Scale, margins and synergy potential
Encora’s expected FY26 revenue of about 600 million dollars and adjusted EBITDA margin of around 19 percent is accretive to Coforge’s scale and could lift the combined operating profile once integration costs normalise.
Company and analyst models suggest potential for about 90 basis points of EBITDA margin improvement at the combined level over time, driven by scale benefits, better utilisation and cross leverage of high-value engineering talent across accounts.
Coforge has delivered roughly mid-teens revenue growth in recent years despite macro challenges, and internal scenario models point to the combined firm sustaining mid-teens growth in the medium term, although these are described as scenarios rather than formal guidance.
Funding structure and leverage
The deal is structured predominantly as an all stock transaction, which reduces upfront cash requirements but significantly dilutes existing shareholders, given the roughly 20 percent stake issued to Encora’s owners.
The additional funding of up to 550 million dollars via a bridge loan or QIP will either increase leverage or add further equity dilution, but is positioned as necessary to retire Encora’s existing debt and maintain a prudent balance sheet.
Investor perspectives
Analysts highlight that the acquisition catapults Coforge into a higher revenue bracket and strengthens its AI engineering positioning, but also raises questions about integration execution, margin sustainability, and the ability to maintain double-digit organic growth on a larger base.
For long term investors, the key judgement is whether the strategic upside of owning a scarce, scaled AI native engineering asset outweighs near term dilution, integration spend and macro uncertainty in client budgets.
For a deeper view of Coforge stock price, complete financial performance, balance sheet strength, and valuation trends post‑Encora deal, visit its detailed profile on Finology Ticker.
The Encora deal takes place amid an industry wide race among IT and engineering services firms to build scaled AI, data and digital engineering practices that can convert clients’ AI pilots into enterprise wide rollout programmes.
Larger Indian IT majors have been buying AI and cloud assets, with examples including acquisitions focused on agentic AI, marketing technology and data platforms, indicating that inorganic moves are central to building AI capabilities quickly.
Coforge’s move stands out because of its size relative to the company’s pre-deal scale, making it one of the largest digital engineering acquisitions out of India and significantly reshaping the mid-tier competitive landscape.
By combining Encora’s strong presence in Latin America and US hi tech ecosystems with Coforge’s domain heavy practices, the combined firm now competes not only with Indian peers but also with specialised global digital engineering and near shore players.
For large clients, the attraction is a single partner that can provide AI first engineering, cloud migration and data platform modernisation across regions, helping them consolidate vendor portfolios while accelerating AI roadmaps.
Stay updated on how broader market movements and sector valuations are influencing Coforge’s positioning in the Indian IT and digital engineering space on Finology Market.
Integration and cultural alignment
Successfully integrating a roughly 600 million dollar AI native engineering business with its own operations is the most immediate challenge for Coforge, especially across different geographies, delivery models and cultural contexts.
Retention of Encora’s senior leadership and key engineering talent will be crucial to maintaining client relationships, innovation capacity and the higher margin profile associated with product engineering work.
Margin delivery and synergy timing
While management and models point to synergy potential of around 90 basis points of EBITDA margin improvement, near-term results may be weighed down by integration expenses, investments in sales and go-to-market and any slowdowns in client demand.
Investors should track the combined company’s ability to protect Encora’s 19 percent adjusted EBITDA margin while also sustaining Coforge’s own profitability as teams, systems and offerings are unified.
Capital structure and dilution impact
The significant equity issuance expands the share base and may pressure per share earnings metrics in the short term, even if absolute earnings and cash flows increase.
The bridge loan or QIP, depending on its final structure, will determine the leverage profile and interest costs, influencing how quickly the deal can become earnings accretive on a per share basis.
Sector cyclicality and client concentration
Coforge’s large exposure to BFSI and travel combined with Encora’s hi tech and software leaning portfolio means the combined firm remains sensitive to spending cycles in technology, financial services and travel.
However, greater diversification by vertical and geography, plus a higher mix of annuity style product and platform engineering work, provides some cushion against isolated demand shocks.
The Encora acquisition signals Coforge’s intent to step into the global big league of AI and engineering-driven technology services firms, not merely as a domain-led mid-tier outsourcer but as a scaled partner for complex, AI-heavy digital transformation.
It marks a strategic pivot towards an AI-first, product engineering-centric portfolio, in which AI-led engineering, cloud and data services are the core revenue engines rather than adjunct capabilities.
The transaction also confirms Coforge’s appetite for large, transformative M&A, building on its prior acquisitions and raising expectations around disciplined capital allocation, integration excellence and sustained organic growth.
With global private equity sponsors like Advent and Warburg Pincus on its cap table, Coforge positions itself as a more attractive platform for future capital, ecosystem partnerships and senior talent in AI, engineering and consulting.
For employees, clients and investors, the long-term success of this deal will depend on how well Coforge translates its expanded AI engineering heft and near-shore delivery scale into consistent, profitable growth while retaining its differentiated domain culture.
Watch the latest CNBC Awaaz analysis discussing Coforge’s stock movement and volatility ahead of its board meeting for a real‑time market perspective.
1. What is Coforge’s Encora acquisition about?
Coforge has signed a definitive agreement to acquire 100 percent of US based Encora, an AI native digital engineering firm, for an enterprise value of about 2.35 billion dollars in an all stock deal.
The move will create a combined technology services company with around 2.5 billion dollars in annual revenue and a strong focus on AI led engineering, data and cloud services.
2. Why is Encora important to Coforge’s AI strategy?
Encora specialises in AI native product engineering, data engineering and cloud native development for hi tech, software and healthcare clients, giving Coforge capabilities that go beyond traditional IT outsourcing.
These strengths complement Coforge’s domain led model in BFSI, insurance and travel and help build an AI first portfolio with both product and enterprise transformation work.
3. How will the deal change Coforge’s revenue mix?
Post acquisition, hi tech and healthcare are expected to individually operate at more than 170 million dollars in annualised revenue, making them meaningful verticals alongside BFSI, insurance and travel.
North America revenue is expected to rise to roughly 1.4 billion dollars, with a sharper skew towards US tech hubs and a stronger mix of product engineering and AI services.
4. Is the deal cash or stock, and what about dilution?
The acquisition is predominantly an all stock transaction funded through a preferential allotment of shares worth about 1.89 billion dollars, giving Encora’s shareholders roughly a 20 percent stake in the combined firm.
Coforge may additionally raise up to 550 million dollars via a bridge loan or QIP to retire Encora’s existing debt, which will impact leverage and potentially add incremental equity dilution.
5. What are the main risks investors should monitor?
Key risks include integration complexity across geographies, cultures and service lines, retention of Encora’s leadership and talent, and timely realisation of projected synergies and margin improvements.
Investors should also watch capital structure evolution, per share earnings trends and how resilient client spending remains in hi tech, BFSI and travel over the next few years.