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IDBI Capital Report
Newgen Software Technologies Ltd. reported robust Q3 FY24 numbers registering 27% YoY growth in revenues and 44.5% YoY growth in profit after tax.
Newgen Software is seeing healthy traction in order book (up 20% YoY) and higher deal size in insurance and banking, financial services and insurance.
In addition, there is substantial execution of order book which was won in last few quarters. The digital cycle is on cusp of a robust growth and improving mature market growth will lead to strong logo addition and revenues.
Hence, we expect revenues to grow at a compound annual growth rate of 29% over FY23-FY26E.
Higher growth in revenues will further boost margins leading to PAT CAGR of 34% over FY23-FY26E.
We have revised our earnings per share estimates upwards by 5% & 0.3% for FY25E and FY26E.
Hence, we maintain 'Buy' rating on the stock with a revised target price of Rs 1,042 (34 times FY26E EPS) (previous target price 816 and multiple of 27 times).
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