Buy Newgen Software; target of Rs 440: ICICI Direct

The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

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ICICI Direct's research report on Newgen Software

Incorporated in 1992, Newgen is a low code application development platform company. It is an established player in the market of enterprise content management (ECM), business process management (BPM) & customer communications management (CCM). Annuity based revenues (SaaS + ATS/AMC + Support) comprises 59% of revenue mix while license & others form 20.7% revenue mix each Vertical wise BFSI comprises 66% of revenue mix while geographical split has been largely equal between India, US, EMEA & APAC.

Outlook

We initiate coverage under Stock Tales format with a BUY rating and a target price of Rs 440. We value Newgen at 14x FY24 EPS to arrive at a target price of Rs 440 per share.

More Info

At 11:01 hrs Newgen Software Technologies was quoting at Rs 361.90, up Rs 6.40, or 1.80 percent.

It has touched an intraday high of Rs 365.60 and an intraday low of Rs 356.05.

It was trading with volumes of 20,189 shares, compared to its thirty day average of 27,181 shares, a decrease of -25.72 percent.

In the previous trading session, the share closed down 2.87 percent or Rs 10.50 at Rs 355.50.

The share touched its 52-week high Rs 754.70 and 52-week low Rs 320.85 on 05 July, 2021 and 21 June, 2022, respectively.

Currently, it is trading 52.05 percent below its 52-week high and 12.79 percent above its 52-week low.

Market capitalisation stands at Rs 2,531.70 crore.

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