Newgen Software surges 19% on heavy volumes; zooms 42% in two weeks
Source: Business Standard
In two weeks, the stock price of the computers software and consulting firm has zoomed 42 per cent.
The average trading volumes on the counter had jumped over four-fold so far. A combined 2.42 million equity shares, representing 1.73 per cent of the total equity of the company, have changed hands on the NSE and BSE.
Newgen is a global software company engaged in the business of software product development including designing and delivering end-to-end software solutions. It covers the entire spectrum of software services from workflow automation to document management to imaging, among other areas.
Newgen provides a complete range of software products that helps automate business processes. The company’s solutions enable document intensive organisations and industries in sectors such as finance and banking, insurance (BFSI) and government departments, to improve productivity through better document management and workflow implementation.
Additionally, the company is committed to expanding its product portfolio by working deeper in the banking and insurance verticals, to cater to emerging market demands.
Newgen reported a weak set of numbers in the April to June quarter (Q1FY25), down 16 per cent quarter-on-quarter (QoQ), and up 25 per cent year-on-year (YoY). The sequential weakness was predominantly led by seasonality factors for the products business.
The company expects good traction in the BFS and Insurance segment particularly and would continue to invest in R&D and new product launches for the segment.
Further, rest of sales strategy in the US, probable merger and acquisition (M&A) in mature markets and higher deal closure in the Asia-Pacific (APAC) region and traditional markets could further boost revenue growth.
The company’s management emphasised on hiring more headcount to cater to growing demand. Analysts at IDBI Capital expect Newgen’s revenues to grow at 28 per cent YoY. Higher growth in revenues will further boost margins, leading to profit after tax growth of 31 per cent YoY.
The management said the company is witnessing increased adoption of the company’s trade, digital lending and supply chain finance solutions, driving significant revenue growth. With substantial license revenues in Q4 of last year, Q1FY25 marked a significant uptick in implementation revenues, management said.
“Key focus areas for growth in the coming quarters for us include continued product innovation, scaling of operations and increased global reach, especially in the mature market and enhancing our banking and insurance solutions,” the company said.
Further, Newgen Tech is on track with its strategies to improve market share. GSI partnership and cross sell are expected to drive long-term growth, analyst at IDBI Capital said in the company’s Q1 result update.
The stock is, however, trading above the brokerage’s target price of Rs 1,072 per share.
First Published: Sep 26 2024 | 12:16 PM IST
