Newgen Software Technologies Ltd. share price target

Newgen reported strong revenue growth of 23.2% YoY in Q2FY25 led by license sales predominantly in APAC and healthy growth across other markets.

Newgen reported in-line revenue growth of 25% YoY. EBIT margin was at 12.7%, outperforming consensus estimates of 11.3%, despite increased hiring, employee cost and investment in sales and marketing.

Coasting along a strong and stable growth trajectory

Coasting along a strong and stable growth trajectory

Soaring on Digital transformation demand

Newgen Software reported revenue of ? 2.5bn, up 34% YoY in Q1FY24. Strong revenue growth in a seasonally weak quarter was driven by high growth in license revenue (up 185% YoY) and annuity revenue (up 26.3% YoY). Growth was strong across all markets - APAC grew 45.7% YoY, EMEA grew 38.4%, US grew 35.8% and India grew 24.5%.

Newgen Software Tech (Newgen) reported revenue of INR 2,517mn, up 33.9% YoY (ISEC: 21.8%) in Q1FY24. Strong revenue growth in a seasonally weak quarter was driven by high growth in license revenue (up 184.6% YoY) and annuity revenue (up 26.3% YoY). Growth was strong across all markets - India grew 24.5% YoY, EMEA grew 38.4% YoY, APAC grew 45.7% YoY and US grew 35.8% YoY.

We re-initiate coverage on Newgen with a BUY rating and 12-month target price of Rs797, implying 19% potential upside. Newgen, with annual revenue of US$121mn in FY23, is a software product company with most of its revenue derived from low code business process automation (BPM), enterprise content management (ECM) and customer communication management (CCM).

Newgen reported decent financials for Q4FY23. The company’s Q3 & Q4 are stronger than H1. Newgen added 11 new clients in Q4FY24, taking the total to 47 in FY23. Subscription and annuity revenue grew 25% and 32% YoY to ? 880mn / ? 1.66bn.

Strong performance; robust order book