Coforge's $2.35 billion deal to buy Encora 'bold' but costly move, analysts say

Indian IT firm Coforge COFO.NS to buy Encora at enterprise value of $2.35 billion to boost in-house AI capabilities and expand its footprint in US and Latin America

However, analysts say the deal is expensive, cautioning against near term earnings and stock price dilution

Morgan Stanley analysts call the deal a "bold move" but say the price tag appears expensive and is likely to be dilutive to earnings

Stock trading 1.2% higher at 1,694 rupees, pulling back from initial decline of 2.2%

COFO's preference share issue creates an overhang once the lock-in period ends, Morgan Stanley says, forecasting a 12–13% decline in Coforge's stock

DAM Capital analysts say deal to be EPS dilutive, especially since price paid is higher than COFO's current valuation

YTD, COFO down 12.4% vs IT index's .NIFTYIT 10.9% drop