NEWGEN - Investment Analysis

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

Investment Rating: 3.9

🧠 Fundamental Analysis: Newgen Software Technologies Ltd. (NEWGEN)

Newgen is a niche enterprise software provider with strong profitability, low debt, and solid capital efficiency. However, recent earnings volatility and a sharp price correction suggest caution in the short term.

Metric Value Implication

P/E Ratio 38.3 Slightly expensive vs. industry PE of 29.1 — pricing in growth potential

PEG Ratio 1.62 Fair — growth is moderately priced

ROE / ROCE 22.5% / 28.0% Strong — indicates efficient capital deployment

Dividend Yield 0.58% Modest — not a major income generator

Debt-to-Equity 0.04 Excellent — virtually debt-free

EPS ₹22.5 Solid — supports valuation

Profit Growth (QoQ) -54% Sharp decline — needs monitoring

📉 Technical & Trend Analysis

Current Price: ₹858

DMA 50 / DMA 200: ₹1,066 / ₹1,101 — trading well below both, bearish trend

RSI: 18.7 — extremely oversold, potential bounce

MACD: -80.1 — strong negative momentum

Volume: Below average — weak participation

✅ Long-Term Investment Potential

Yes — selectively attractive. Newgen offers strong fundamentals and long-term potential in enterprise automation and digital transformation. However, the recent correction and earnings dip warrant a cautious entry.

🎯 Ideal Entry Price Zone

Buy Zone: ₹800–₹850

Near oversold RSI and technical support

Accumulate gradually if PEG drops below 1.5 and ROE stays >20%

Avoid chasing above ₹1,000 unless earnings growth resumes

🧭 Exit Strategy & Holding Period

If you're already holding

Holding Period: 2–4 years — to benefit from digital transformation tailwinds

Exit Strategy

Partial Exit near ₹1,600–₹1,750 if P/E exceeds 45 and PEG crosses 2

Hold if ROCE remains >25% and PAT growth stabilizes

Reassess if quarterly profits continue to decline or RSI fails to recover

Would you like a comparison with other low-debt tech midcaps like Tata Elxsi, Route Mobile, or KPIT to build a diversified digital portfolio?

Edit in a page