⚠ 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: 3.7
| Stock Code | NEWGEN | Market Cap | 8,162 Cr. | Current Price | 573 ₹ | High / Low | 1,379 ₹ |
| Stock P/E | 26.6 | Book Value | 103 ₹ | Dividend Yield | 0.87 % | ROCE | 27.8 % |
| ROE | 22.4 % | Face Value | 10.0 ₹ | DMA 50 | 774 ₹ | DMA 200 | 915 ₹ |
| Chg in FII Hold | -0.28 % | Chg in DII Hold | 0.10 % | PAT Qtr | 79.8 Cr. | PAT Prev Qtr | 76.7 Cr. |
| RSI | 15.3 | MACD | -70.2 | Volume | 2,58,947 | Avg Vol 1Wk | 4,89,067 |
| Low price | 570 ₹ | High price | 1,379 ₹ | PEG Ratio | 1.17 | Debt to equity | 0.03 |
| 52w Index | 0.31 % | Qtr Profit Var | -4.72 % | EPS | 20.0 ₹ | Industry PE | 23.9 |
📊 Core Financials
- Revenue & Profitability: Quarterly PAT declined slightly from 76.7 Cr. to 79.8 Cr. (-4.72% variation), showing modest earnings pressure. EPS at 20.0 ₹ reflects fair profitability.
- Margins: ROCE at 27.8% and ROE at 22.4% highlight strong efficiency and shareholder returns.
- Debt: Debt-to-equity ratio of 0.03 indicates negligible leverage, strengthening financial stability.
- Cash Flow: Dividend yield of 0.87% provides modest shareholder returns.
💹 Valuation Indicators
- P/E Ratio: 26.6 vs Industry PE of 23.9 → Slightly overvalued compared to peers.
- P/B Ratio: Current Price (573 ₹) / Book Value (103 ₹) ≈ 5.6 → Premium valuation.
- PEG Ratio: 1.17 → Fair, suggesting valuation is reasonable relative to growth.
- Intrinsic Value: Current price trades above fair value, limiting near-term upside.
🏭 Business Model & Competitive Advantage
- Newgen Software operates in enterprise software solutions, focusing on digital transformation, automation, and workflow management.
- Strong positioning in niche enterprise solutions provides competitive advantage.
- Low debt and high return ratios strengthen long-term sustainability, though growth momentum has slowed.
📈 Entry Zone & Long-Term Guidance
- Entry Zone: Attractive accumulation range between 520 ₹ – 550 ₹, closer to support levels and below DMA 200.
- Long-Term Holding: Suitable for investors seeking exposure to enterprise software growth. Staggered buying recommended due to high volatility and stretched valuations.
✅ Positive
- High ROCE (27.8%) and ROE (22.4%) highlight efficiency.
- Debt-to-equity ratio of 0.03 ensures financial resilience.
- DII holding increased by 0.10%, reflecting domestic institutional support.
⚠️ Limitation
- P/E (26.6) and P/B (5.6) ratios indicate premium valuations.
- Dividend yield of 0.87% is modest, limiting passive income appeal.
- RSI at 15.3 and MACD at -70.2 suggest oversold conditions and weak momentum.
📉 Company Negative News
- FII holding decreased by 0.28%, showing reduced foreign investor confidence.
- Quarterly PAT variation (-4.72%) indicates earnings pressure.
📈 Company Positive News
- DII inflows (+0.10%) highlight domestic institutional interest.
- Strong ROCE and ROE metrics reinforce operational efficiency.
- Debt-free operations enhance financial stability.
🌐 Industry
- Enterprise software sector benefits from digital transformation and automation demand.
- Industry PE at 23.9 suggests Newgen trades at a slight premium, reflecting growth expectations.
🔎 Conclusion
Newgen Software demonstrates strong fundamentals with high return ratios, negligible debt, and a niche focus in enterprise solutions. However, valuations are stretched and earnings momentum has slowed. Investors may consider entering around 520–550 ₹ for long-term holding, with staggered buying to manage volatility. The company remains strategically positioned in digital transformation but requires caution due to premium pricing and weak near-term momentum.
I can also outline technical support and resistance zones using RSI, MACD, and DMA data to complement this fundamental analysis if you’d like.