NEWGEN - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 4.3

📊 Core Financials Overview

Profitability

PAT declined from ₹101 Cr to ₹48.7 Cr — a short-term dip, but YoY growth remains strong at 14.9%.

EPS: ₹21.2 — solid for a mid-cap tech company.

Return Metrics

ROCE: 27.8% and ROE: 22.4% — excellent, indicating strong capital efficiency and shareholder value creation.

Debt Profile

Debt-to-equity: 0.03 — virtually debt-free, enhancing financial resilience.

Cash Flow: Not explicitly stated, but low debt and high ROCE suggest healthy operating cash flows.

💹 Valuation Indicators

Metric Value Commentary

P/E Ratio 43.5 Premium vs. industry average of 30.0 — reflects growth optimism.

P/B Ratio ~9.21 Elevated — justified only if growth sustains.

PEG Ratio 1.91 Fair — valuation aligned with growth expectations.

Intrinsic Value Estimated near ₹850–₹880 Current price of ₹919 is slightly above fair value — mildly overvalued.

🧠 Business Model & Competitive Advantage

Newgen Software Technologies Ltd. is a global provider of digital transformation platforms, specializing in

Core Offerings

Low-code platforms, enterprise content management (ECM), and business process management (BPM).

Flagship product: NewgenONE — a unified digital automation suite.

Revenue Streams

Software licensing, annuity-based services, and support — diversified across BFSI (74%), insurance (14%), and government (4%)

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Global Reach

500+ active customers across 76 countries, including marquee clients in the US, UK, UAE, and India

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Strategic Growth Drivers

Expansion into mature markets like the US and Europe — targeting Fortune 2000 firms

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Investment in GenAI and AI-powered platforms like Marvin and Lumyn — enhancing automation and decision-making

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Strong pipeline in BFSI, insurance, and government sectors — with 22% YoY revenue growth and 70% YoY growth in license sales

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Newgen’s competitive edge lies in its low-code innovation, sectoral depth, and global expansion strategy, positioning it as a scalable and future-ready tech player.

📈 Technical & Sentiment Signals

RSI: 56.9 — neutral zone, no strong momentum.

MACD: Negative — mild bearish crossover.

Volume: Significantly above average — suggests strong investor interest.

DMA 50/200: Price below both — short-term weakness, long-term support near ₹1,037.

🎯 Entry Zone & Long-Term Guidance

Suggested Entry Zone: ₹850–₹900 — near intrinsic value and below DMA levels.

Long-Term View: NEWGEN is a high-quality digital transformation play with strong fundamentals, low debt, and global exposure. Suitable for long-term holding, especially for investors bullish on enterprise automation and AI-driven platforms. Dividend yield of 0.54% adds modest income support.

You can explore Newgen’s growth strategy and investment outlook or its equity research summary for deeper insights. Let me know if you'd like a comparison with Tata Elxsi or Persistent Systems.

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