Newgen Software Q2 Results Review - Beat On All Fronts; Robust Growth Outlook Retained: Dolat Capital

Dolat Capital Report

Newgen Software Technologies Ltd. reported revenue growth of 14.8% QoQ (our estimate: 12.7%), led by Q2 seasonality tailwind and strong license wins (largely in APAC). Operating profit margin too, with seasonality and operating efficiencies, expanded by 808 bps QoQ to 20.8% (our estimate: 18.7%).

Management reiterated its $500 million aspiration over next three-four years led by:

1. Improving U.S. presence (target larger financial institutions),

2. Mining through product upsell (trade finance, supply chain finance), and

3. Scaling more verticals such as Insurance and Government.

Newgen’s initiatives to enhance existing pipeline/upsell indicate notable efforts to mitigate macro headwinds and deliver robust performance.

We raise EPS estimate by 2.4%/1.2% for FY25E/FY26E and expect EPS growth of 23.4% in FY27E. However, noting recent price run-up we revise our rating to ‘Accumulate’ with target price of Rs 1,430 (implies ~44 times on FY27E EPS).

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