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Dolat Capital Report
We initiate coverage on Newgen Software Technologies Ltd. with a ‘Buy’ rating and target price of Rs 1,300 (implies ~50 times/40 times on FY26E/FY27E earnings per share).
With a strong scalable model, we believe the company has a significant growth runway driven by:
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its strong performance in banking sector with 21% CAGR over FY19-24,
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consistent customer upgrades (tripled Rs 50 million plus customers in last four years), and
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success in rapid transition towards SaaS with 40% CAGR over FY19-FY24 (now accounting 10% of revenues).
Newgen aspires to achieve $500 million revenue over next four-five years (implies 25%+ CAGR), supported by confidence of continued growth rate improvement over past run-rate. Newgen delivered revenue/EPS growth of 15%/20% CAGR over FY19-FY24.
Noting Newgen’s varied capabilities, healthy customer addition, powering GTM strategy (expanding GSI channel) and revered industry recognition, we expect Newgen to deliver a strong revenue/EPS CAGR of 24%/27% over FY24- FY26E.
Risks
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Intense Competition
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High Sector Concentration
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‘Niche’ Player in Automation
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Business and results of operations are dependent on the contracts
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Failure or delays in obtaining third-party certifications and accreditations
Click on the attachment to read the full report:
PN Gadgil Jewellers IPO – Issue Details, Investment Thesis, Financials, Peer Comparison, Risks: Dolat Capital
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