Stock Tales - Newgen Software - ICICI Direct

Incorporated in 1992, Newgen is a low code application development platform company. It is an established player in the market of enterprise content management (ECM), business process management (BPM) & customer communications management (CCM).

- Annuity based revenues (SaaS + ATS/AMC + Support) comprises 59% of revenue mix while license & others form 20.7% revenue mix each

- Vertical wise BFSI comprises 66% of revenue mix while geographical split has been largely equal between India, US, EMEA & APAC

Key triggers for future price performance

- Strong logo addition and increasing annuity mix (recurring business) from existing clients would aid revenue growth as we baked in 17.2% CAGR revenue growth over FY22-24. We expect the company to return to historical 70-80 logo additions/year as travel opens up. This coupled with subscription (SaaS + ATS/AMC) growth of 31% CAGR over FY22-24 is expected to drive annuity (SaaS + ATS/AMC+Support) revenues, which are expected to grow at 21.8% CAGR in the same period and forms 63% of the revenue mix

- The company is working on 70-80 cases as far as GSI opportunity is concerned. Depending on the scenario analysis we did, it has an incremental revenue opportunity of Rs. 79-131 crore in the next two years over and above its normal revenue run rate

- Strong focus on R&D investments to stay competitive. Newgen now has 23 patent grants across India and US out of 43 patents filed so far. Its R&D team has grown to about 580 employees in FY22 (vs ~250 in FY18) and R&D investments as percentage of sales is 10.2% in FY22 vs. 7.2% in FY18. The company also acquired recently 'Number Theory' to strengthen its platform with AI/ML modelling and data analytics capability

For details, click on the link below: Link to the Report

Shares of Newgen Software Technologies Limited was last trading in BSE at Rs. 355.50 as compared to the previous close of Rs. 366.00. The total number of shares traded during the day was 31339 in over 897 trades.

The stock hit an intraday high of Rs. 376.65 and intraday low of 353.10. The net turnover during the day was Rs. 11625360.00.

Source : Equity Bulls

Keywords

NewgenSoftwareTechnologies INE619B01017 StockTales ICICIDirect