Newgen stock surges 8% to hit new high on $2.27-mn deal win; up 46% in Dec

Within seven months, Newgen's share price has more than doubled, or zoomed 118 per cent, from the level of Rs 793 that it hit on June 4

Newgen Software Technologies shares hit a new high of Rs 1,725.15, as they surged 8 per cent on the BSE in Thursday’s intra-day trade after the company's wholly-owned subsidiary incorporated in Saudi Arabia received a purchase order worth $2.27 million from an international entity that it has not named.

 

Newgen Software Technologies Company Limited, the wholly-owned subsidiary incorporated in Saudi Arabia has received and accepted the purchase order, the company said in an exchange filing. The aggregate value of the aforesaid purchase order is USD 2,266,667.00, the company said.

 

Meanwhile, thus far in the month of December, the stock price of Newgen Software has rallied 46 per cent. Within seven months, Newgen's stock price has more than doubled, or zoomed 118 per cent, from the level of Rs 793 that it hit on June 4, 2024.

 

On December 3, the company accepted a purchase order from the Reserve Bank of India (RBI). On November 28, 2024, the company announced that it had received a purchase order from the RBI to implement and maintain its Regulatory Application Management System (RAMS). The value of the purchase order is over Rs 32 crore. The contract is expected to be executed in seven years, the company said.

 

Newgen Software is a leader in providing business process management (BPM), enterprise content management (ECM), and customer communication management (CCM) solutions. The company offers a range of solutions that help organisations automate workflows, manage content, and enhance customer experiences across industries such as banking, insurance, healthcare, government, and telecom, among others.

 

In the first half (April to September) of fiscal 2025 (H1FY25), the company reported revenues of Rs 676 crore, compared to Rs 545 crore in H1FY24; it is likely to grow at a healthy pace in the current fiscal. Earnings before interest, tax, depreciation and amortisation (Ebitda) remained healthy at Rs 292 crore due to improving revenue and the addition of new customers. 

 

The company's focus on larger customers with bigger orders, continuous development and innovation in products and increasing overseas sales in new geographies is expected to lead to revenue growth over the medium-term, noted CRISIL Ratings.  With the continuous addition of new customers and increasing business from existing customers, the company's revenues and profitability are expected to grow at a healthy pace. The company's Ebitda margin is expected to remain healthy at 22-24 per cent over the medium-term due to better absorption of fixed cost, according to CRISIL Ratings.

 

Meanwhile, Newgen Software is a low-code, automation focused platform player that bridges an organisation’s content, processes and communication systems to steer it towards efficiency and success. The strong acceptance and traction in Banking (with segment growth of 21 per cent compound annual growth rate (CAGR) over FY19-FY24), consistent customer upgrades (tripled Rs 50 mn+ customers in past four years), and success in rapid transition towards SaaS (segment growth of 40 per cent CAGR over FY19-FY24, now accounting for 10 per cent of revenues) support growth optimism, according to analysts.

 

In sum, Newgen’s solutions form a key building block in an organisation’s digital transformation journey, with their easy adaptability and quick-to-implement aspects in a client’s existing ecosystem; this ensures quicker, consistent and robust sales velocity.

 

According to analysts at Dolat Capital, Newgen aspires to achieve $500 million in revenues over the next four to five years (implies 25 per cent plus CAGR), supported by confidence of continued growth rate improvement over past run-rate. Newgen delivered Revenue/EPS growth of 15 per cent/20 per cent CAGR over FY19-FY24. 

 

Noting Newgen’s varied capabilities, its healthy customer addition powering GTM strategy (expanding GSI channel), and revered industry recognition, analysts expect Newgen to deliver a strong Revenue/EPS CAGR of 24 per cent/27 per cent over FY24- FY26E.

 

“With a strong scalable model, we believe the company has a significant growth runway driven by its strong performance in banking sector with 21 per cent CAGR over FY19-24, consistent customer upgrades (tripled Rs 50 million+ customers in last 4 years), and success in rapid transition towards SaaS with 40 per cent CAGR over FY19-FY24 (now accounting 10 per cent of revenues),” CRISIL Ratings said in its September month initiate coverage report.