At a time when large-cap IT stocks are struggling to climb, small-cap IT stocks are rewarding investors with handsome returns. Newgen Software Technologies was one such stock that delivered nearly 58.50% return in the current year so far, appreciating from ₹360 apiece to ₹570.40 apiece.
This recent stock boom has resulted in a stunning 322% gain over the last three-year period. After hitting its 52-week low of ₹300 apiece in December last year, the stock gained momentum and zoomed 98.33% in just five months to hit a new 52-week high of ₹595 on May 02.
For the March quarter, the company reported robust numbers, beating analysts' estimates. It reported a 37% jump in its consolidated profit after tax to ₹78.6 crore as compared to a net profit of ₹57.4 crore in the corresponding quarter of the preceding fiscal.
The company is delivering steady growth in its net profit, quarter after quarter. In the first, second, and third quarters of the current fiscal year, it posted a net profit of ₹19, ₹30, and ₹40 crore, respectively.
It reported a 32% increase in overall revenues during the March quarter at ₹305.1 crore compared to ₹231 crore in the same quarter last fiscal. The operating profit, on the other hand, came in at ₹96 crore, a growth of 62.71% QoQ and 43.28% YoY.
The profit after tax in the entire financial year rose nearly 12% to ₹176.3 crore from ₹164.2 crore in FY22. This increase was accompanied by significant revenue growth of 32% YoY in FY23, with the revenue surpassing the ₹1,000 crore milestone for the first time, standing at ₹1,008 crore in FY23.
India, Europe, the Middle East, and Africa were the largest contributors in the revenue growth during the year, the company said, adding that the firm onboarded 51 new high-value customers with over ₹5 crore billing in FY23 compared to the preceding fiscal's number at 38.
Following the company's impressive Q4FY23 performance, domestic brokerage firm Nuvama Professional Client Group maintained its 'buy' recommendation on the stock and raised its target price to ₹690 apiece, indicating an upside of 21% from the stock's current market price.
Newgen Software reported a better-than-estimated revenue and PAT in Q4 FY23, led by emerging markets, while mature markets faced some challenges, said the brokerage.
The company bagged 11 logos in Q4, taking the total wins to 47 in FY23. It is targeting several subscription-based deals to improve revenue and visibility. Subscription revenue grew 25% YoY to ₹88 crore in Q4FY23.
In terms of order book, the company is much better placed than indicated by its revenue due to deferred revenue from its subscription model, it noted.
Nuvama has revised its estimates upward and expects revenue and PAT CAGR of 18% and 23%, respectively, over FY23–25.
Incorporated in 1992, Newgen is a low-code application development platform company. It is an established player in the market of enterprise content management (ECM), business process management (BPM), and customer communications management (CCM).
04 analysts polled by MintGenie on average have a 'strong buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
