Newgen Software Q2 Results Review - A Strong Quarter: IDBI Capital

IDBI Capital Report

Newgen Software Technologies Ltd. reported an in-line revenue growth with our estimates for the quarter on the back of contextual content services (OmniDocs), low code process automation (iBPS) and Omnichannel customer engagement.

We have noticed a resilient business model, backed by Annuity business (Support 30%, ATS/AMC 20% & SaaS 10%), sale of products (18%) and sale of services (22%).

In Q2, company has added eight new logos along with multiple large deals across globe including USA, Saudi Arabia, Singapore and India. Company’s 80% large deals come from existing clients and its retention rate stood at 95-98%.

Newgen’s growth path is 50% dependent on upscaling their small logos into large ones. Continued growth run rate over the last five years, backed by banking sector coupled with customer upgradation/transition towards SaaS likely deliver strong momentum in the medium term.

We assume coverage of the stock with a target price of Rs 1,450 (50 times FY26E EPS), with a Hold rating on the stock.

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