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IDBI Capital Report
Newgen Software Technologies Ltd. reported robust revenue growth in Q4 (up 23% YoY) and FY24 (up 28% YoY). Further, the company has seen strong order booking (up 19% YoY to Rs 15.60 billion) and new and mining booking (up 29% YoY).
This coupled with momentum in new logo addition and higher deal sizes has made the company aspire to continue the FY24 revenue growth momentum. Further, resting of sales strategy in US, probable merger and acquisition in mature markets and higher deal closure in APAC could further boost revenue growth.
We expect revenues to grow at a compound annual growth rate of 27% over FY24-FY26E. Higher growth in revenues will further boost margins leading to PAT CAGR of 32% over FY24-FY26E.
Hence, we maintain Buy rating on the stock with a revised target price of Rs 1,072 (34 times FY26E EPS) (previous target price Rs 1,042 and multiple of 34 times).
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