⚠ Disclaimer: This report is generated using AI tools and is for informational purposes only. It does not constitute investment advice. Please consult a registered financial advisor before making any investment decisions.
NEWGEN - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.9
| Stock Code | NEWGEN | Market Cap | 6,542 Cr. | Current Price | 460 ₹ | High / Low | 1,379 ₹ |
| Stock P/E | 21.4 | Book Value | 103 ₹ | Dividend Yield | 1.09 % | ROCE | 27.8 % |
| ROE | 22.4 % | Face Value | 10.0 ₹ | DMA 50 | 572 ₹ | DMA 200 | 802 ₹ |
| Chg in FII Hold | -0.28 % | Chg in DII Hold | 0.10 % | PAT Qtr | 79.8 Cr. | PAT Prev Qtr | 76.7 Cr. |
| RSI | 38.6 | MACD | -36.2 | Volume | 26,52,517 | Avg Vol 1Wk | 26,21,954 |
| Low price | 434 ₹ | High price | 1,379 ₹ | PEG Ratio | 0.94 | Debt to equity | 0.03 |
| 52w Index | 2.66 % | Qtr Profit Var | -4.72 % | EPS | 20.0 ₹ | Industry PE | 20.9 |
📊 Financials
- Revenue & Profitability: PAT rose slightly from ₹76.7 Cr. to ₹79.8 Cr., though quarterly variation shows -4.72% decline. EPS at ₹20.0 is decent.
- Margins & Returns: ROCE (27.8%) and ROE (22.4%) highlight strong efficiency and profitability.
- Debt: Debt-to-equity ratio of 0.03 indicates very low leverage, ensuring financial stability.
- Cash Flow: Strong profitability and minimal debt support healthy cash flows.
💹 Valuation
- P/E Ratio: 21.4 vs Industry PE of 20.9 → Fairly valued compared to peers.
- P/B Ratio: ~4.46 (Price ₹460 / Book Value ₹103) → Slightly expensive on book value basis.
- PEG Ratio: 0.94 → Attractive, growth justifies valuation.
- Intrinsic Value: Current price appears fairly valued, offering moderate upside potential.
🏢 Business Model & Competitive Advantage
- Newgen operates in enterprise software solutions, focusing on digital transformation, workflow automation, and document management.
- Competitive advantage lies in niche expertise, strong client base, and recurring revenue streams.
- Dividend yield of 1.09% provides modest shareholder returns.
📈 Entry Zone & Long-Term Guidance
- Entry Zone: Attractive near ₹430–450 range (close to 52W low of ₹434 and below DMA levels).
- Long-Term Holding: Strong candidate for long-term investors due to efficiency, low debt, and fair valuation. Accumulation should be cautious given recent profit decline.
✅ Positive
- Strong ROCE (27.8%) and ROE (22.4%) highlight efficiency.
- Debt-free balance sheet ensures financial safety.
- Dividend yield of 1.09% supports investor confidence.
⚠️ Limitation
- Quarterly profit decline (-4.72%) signals near-term weakness.
- P/B ratio (~4.46) is slightly expensive.
- RSI at 38.6 indicates weak sentiment.
📉 Company Negative News
- FII holdings reduced (-0.28%), showing cautious foreign sentiment.
- MACD at -36.2 indicates bearish technical momentum.
- 52W Index at 2.66% shows weak stock performance relative to highs.
📈 Company Positive News
- DII holdings increased (+0.10%), signaling domestic confidence.
- PAT improved sequentially, reflecting operational strength despite volatility.
- Debt remains negligible, providing financial stability.
🏭 Industry
- Enterprise software industry benefits from digital transformation, automation, and cloud adoption.
- Industry PE at 20.9 suggests valuations are aligned, making Newgen fairly valued.
🔎 Conclusion
- Newgen is fundamentally strong with high efficiency, low debt, and fair valuation.
- However, modest profit decline and weak technical indicators limit aggressive upside.
- Best strategy: Accumulate near ₹430–450 range for long-term holding, focusing on digital transformation growth while avoiding aggressive buying at current levels.