Newgen Software shares plunge 16% following Jefferies downgrade

Newgen Software Technologies Ltd

Shares of Newgen Software Technologies fell 16 percent after brokerage firm Jefferies downgraded the stock to 'Underperform' from its earlier rating of 'Buy' following the company's December quarter results. The brokerage also slashed its price target for Newgen Software by 21 percent to Rs 1,240 from Rs 1,500.

At 2:40 PM, shares of Newgen Software were trading down 13.5 percent at Rs 1,182. The stock has lost over 22 percent of its value since the start of 2025, significantly underperforming the Nifty 50, which has declined by over 1 percent in the same period.

In Q3FY25, Newgen Software's consolidated net profit rose 27 percent sequentially and over 30 percent year-on-year to Rs 89 crore. Revenue from operations grew 5 percent sequentially and 18 percent year-on-year to Rs 381 crore.

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"The revenue growth moderation was due to lower-than-expected revenue realization from the India business, attributed to execution challenges and extended implementation cycles (beyond one year) for certain large, complex deals," ICICI Securities said in a report.

The brokerage highlighted that the management remains optimistic about sustaining over 20 percent annual revenue growth, supported by continued momentum in the licensing business across India and APAC, along with shorter deal cycles.

The company has guided for PAT margins in the 20–23 percent range for FY25.

The management also believes that the existing client base in emerging markets could help scale the business to $500 million in the long term, supported by robust growth rates and healthy margins.

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