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IT Software Stock, Expected To Outperform Peers, Gets Buy Call, Target Price Rs 440: IDBI Capital
IDBI Capital has suggested investors to buy IT Software stock, Newgen Software Technologies Ltd with a target price of Rs 440. The current market price of the stock is Rs 369 apiece, with an intraday gain of 1.71%. Newgen has an integrated software business of content & process which distinguishes it from peers. In addition, higher annuity revenues (60%) & exposure to BFSI (70%) will help the company in fending of macro issues. Check key takeaways below:
1. Newgen Software Technologies Stock Outlook
The last trading price of the stock is Rs 369 with 52-week high at Rs 671 apiece and 52-week low at Rs 320 apiece, respectively. The small cap company has a market capitalisation of Rs 2587 crore.
2. Newgen Software Technologies Return
The stock has jumped 47% in last 5-years, 86% in last 3-years, and declined 33% in last 1-year. In last 1-month, it has gained 8% and 6% in 1-week.
3. Newgen Software Technologies GSI Partnership Provides Revenue Growth Opportunities
Newgen has partnered with few of the leading GSIs in order to drive revenue growth. Company aims to derive 20% - 40% of its overall revenues from this channel in the next 5 years. This will enable the company to grow more than 20% annually and expand margins (by 10%) once it reaches sustainable levels (20-40% of revenues).
Newgen's focus on increasing subscription revenue & leveraging GSI network to drive growth are key longterm margin drivers. Hence we expect 16% CAGR in profits over FY22-25E.
4. Valuation
According to IDBI Capital, "We believe the company is well poised to grow its revenues & PAT at a CAGR 16% & 15% over FY22-FY25E mainly led by strong annuity revenues, growth in SAAS based (subscription based) revenues and increasing penetration in mature markets. In addition the company's higher presence in BFSI (~70%) and annuity revenues (~60%) will enable the company to defend any macro uncertainty in the near term. This coupled with partnership with GSI will further boost revenues. Hence, we initiate coverage on the stock with a target price of Rs. 440 per share (implying a PE of 12 on FY25E EPS)."
About Newgen Software Technologies
The small cap company was incorporated in 1992. It operates in IT Software sector.
Newgen Software Technologies is a leading provider of business process management enterprise content management and customer communication management platforms with large mission-critical solutions deployed at world's leading Banks, Governments, BPOs & IT Companies insurance firms and Healthcare Organizations.
Newgen Software Technologies Limited is a software products company offering a platform that enables organisations to rapidly develop powerful applications addressing their strategic business needs.
Disclaimer
The stock has been picked from the brokerage report of IDBI Capital. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.
