Broker’s call: Newgen Software (Buy)

BUSINESS

Broker’s call: Newgen Software (Buy)

AIMPWA

May 5, 2025

Table of Content

Target: ₹1,666

CMP: ₹1,042.65

Newgen Software Technologies has delivered a robust performance with nearly 13 per cent q-o-q and around 15 per cent y-o-y revenue growth, primarily driven by a sharp uptick in implementation (+39 per cent q-o-q) and license revenue (+23.5 per cent q-o-q), alongside solid traction in India (+9.5 per cent q-o-q) and APAC (+13.8 per cent q-o-q).

Despite prevailing uncertainties, the company projects FY26 revenue growth of about 20 per cent, with momentum expected to sustain across geographies. We model 21/22 per cent growth for FY26/FY27, backed by a robust FY25 order book at ₹1,664 crore and a 30 per cent q-o-q surge in Q4 order intake.

Continued strategic investments in ER&D, sales & marketing, and agentic AI bolster management’s growth conviction. Accordingly, we upgrade the stock to Buy (from Hold), with a revised TP of ₹1,166 (due to recent Nifty IT correction), assigning a 34x FY27E EPS multiple.

Strong traction in new logo addition, improving client mining, digital lending, improving prospects in APAC, India & Middle East will drive company’s revenue growth. In addition, the company is trying to improve growth in insurance vertical and taping trade finance in India & Middle East for the same.

Published on May 5, 2025

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