Buy Newgen Software Technologies, target price Rs 431: ICICI Securities

ICICI Securities has buy call on Newgen Software Technologies with a target price of Rs 431. The current market price of Newgen Software Technologies is Rs 363.1.

Time period given by analyst is year when Newgen Software Technologies Ltd. price can reach defined target.
Newgen Software Technologies Ltd., incorporated in the year 1992, is a Small Cap company (having a market cap of Rs 2540.44 Crore) operating in IT Software sector.

Newgen Software Technologies Ltd. key Products/Revenue Segments include Software Services and Software Products for the year ending 31-Mar-2022.


Financials
For the quarter ended 30-09-2022, the company reported a Consolidated Total Income of Rs 232.70 Crore, up 17.51 % from last quarter Total Income of Rs 198.03 Crore and up 20.92 % from last year same quarter Total Income of Rs 192.44 Crore. Company reported net profit after tax of Rs 30.27 Crore in latest quarter.

Investment Rationale
The brokerage increases revenue estimates by 3.4%/5.2% for FY23/24 led by strong growth in traditional markets, healthy deal wins, winning and mining large accounts and potential addition revenue stream from low code platforms. It decreases EPS estimates by 6.6% for FY23 due to 200bps cut in EBITDA margin estimates, partially offset by an increase in revenue. We increase our FY24 EPS estimate by 4% due to increase in revenue estimates. Newgen is currently trading at ~19x/14x for FY23E/24E EPS of ~Rs20/27, respectively. It maintains BUY rating on the stock with a revised DCF-based target price of Rs431 (prior: Rs415).

Promoter/FII Holdings
Promoters held 55.16 per cent stake in the company as of 30-Jun-2022, while FIIs owned 14.75 per cent, DIIs 6.8 per cent.