Newgen Q1 Results Review - Inline Quarter; Robust Margin Performance: ICICI Securities

ICICI Securities Report

Newgen Software Technologies Ltd. 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.

Asia Pacific continued to do well with 64.9% YoY growth. There is strong traction in lending, trade finance and supply chain financing. We believe, 25%- plus growth could sustain in the near term.

Newgen is on the path to boosting its annuity revenue and maintaining Ebitda margins in the 23–24% range. We introduce FY27 estimates and forecast 26%/24%/22% revenue growth for FY25/FY26/FY27.

Rolling over valuations, our revised target price works out Rs 1,010 with an unchanged target price to earning of 40 times; reiterate 'Hold'.

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