Sumit BilgaiyanEquity99
Newgen is a software product company which operates across Enterprise Content Management (ECM) through its flagship product OmniDocs, Business Process Management through OmniFlow iBPS and Customer Communication Management through OmniOMS.
According to industry reports, these three areas present a market opportunity of US$23bn globally which is expected to grow to US$30bn by FY21 and Indian market is expected to reach US$800mn. Newgen’s customers are very sticky which leads to a 70-80% of revenue from repeat customers and client concentration is low, with about 500 active customers and top-10 customers accounting for only 23% of revenue.
Newgen is focused on driving innovation and adopting solutions in line with rapidly evolving technological trends. It has four patents registered in India and 28 outstanding patent applications in India and two outstanding patent applications in the USA.
It has registered a total of 12 trademarks in India under various classes and had five pending trademark applications for registration in India and registered five copyrights. Newgen is currently trading at 19x FY19 P/E and 13x FY19 EV/EBITDA. We are recommending a buy with target of Rs 275-280 with stoploss of Rs 240.
Disclaimer: The author is Founder of Equity99. The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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