NEWGEN - Fundamental Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Fundamental Rating: 4.0

Newgen Software Technologies Ltd. reflects a solid foundation in profitability, low leverage, and strong operational metrics, though its high valuation and recent earnings dip warrant caution.

🔍 Core Financial Analysis

ROE: 22.5%, ROCE: 28.0% — excellent returns on capital, indicating efficient use of equity and assets.

EPS: ₹22.5 — healthy earnings base, but not growing sharply.

Debt-to-equity: 0.04 — near-zero debt makes it a financially safe company.

Dividend Yield: 0.58% — modest income stream; mostly growth-focused.

Qtr PAT fell from ₹108 Cr. to ₹49.7 Cr. — down 54%, possibly due to seasonality or project delays.

📊 Valuation Metrics

Metric Value Commentary

P/E Ratio 38.3 High vs. industry PE of 29.1 — priced at growth premium

P/B Ratio ~8.02 Expensive in terms of asset base

PEG Ratio 1.62 Slightly above ideal (<1.5); growth adjusted valuation is stretched

Intrinsic Value Likely ₹700–₹760 Indicates stock is currently overvalued

💼 Business Model & Competitive Advantage

Core offerings: digital automation, enterprise content management (ECM), and customer communication solutions.

Services sectors: BFSI, government, and healthcare — diverse and resilient demand base.

Growth from international expansion, especially in the Middle East and North America.

Differentiator: strong intellectual property, product-based SaaS business model, and focus on innovation.

📉 Technical Setup

RSI: 18.7 — deeply oversold, potential for short-term bounce.

MACD: -80.1 — bearish momentum, confirming downward pressure.

Price below both DMA 50 & DMA 200 — in corrective phase.

Volume down vs. 1-week average — selling fatigue visible.

🎯 Entry Zone & Holding Strategy

Suggested Entry Zone: ₹750–₹790 — offers better margin of safety post-correction.

Long-Term Holding View

Strong fundamentals and low debt make it a solid pick for long-term tech exposure.

Keep watch on profit consistency, new client onboarding, and SaaS conversions.

Ideal for tech-focused portfolios that can ride short-term volatility.

Want to explore how Newgen compares against other mid-cap digital tech players like Coforge or Intellect Design Arena? I can dig into growth dynamics, product strength, and institutional confidence. Just say the word. 💻📈✨

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