Mehabe score: 5 G Factor: 4 Piotski Score: 6 The stock has a rating HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 4 and Piotski score of 6.
Description
Newgen Software Technologies is a global software Company and is engaged in the business of software product development including designing and delivering end-to-end software solutions covering the entire spectrum of software services from workflow automation to Document management to imaging.
Main Points
Patent Fillings
As of 31st March, 2020, the Company has to its credit 44 Patent Filings, of which 15 patents have been granted in India and the US, and 16 patent applications are under processing #Site:NEWGENMain Symbol:NEWGEN
Stock trades at 700.0, above its 50dma 540.92. It also trades above its 200dma 368.16. The stock remains bullish on techicals
The 52 week high is at 755.00 and the 52week low is at 173.00
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
– is almost debt free.
– has delivered good profit growth of 35.09% CAGR over last 5 years
– has been maintaining a healthy dividend payout of 19.42%
Weakness
– Stock is trading at 7.35 times its book value
-Promoter holding has decreased over last quarter: -10.57%
Competition
– The industry trades at a mean P/E of 33.8x. Happiest Minds trades at the industry’s max P/E of 138.41x. NEWGEN trades at a P/E of 35.2x
– Industry’s mean G-Factor is 3.8 while the mean Piotski score is 9.0. NEWGEN has a G-Factor of 4 and Piotski scoreof 6.
– Average 1 month return for industry is 24.7%. The max 1- month return was given by Happiest Minds: a return of 69.56 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 160.0 cr compared to Rs 132.0 cr for period ended Jun 2020, a rise of 21.2%
Operating Profits reported at Rs 23.0 cr for period ended Jun 2021 vis-vis 16.0 for period ended Jun 2020 .
Operating Margins expanded 225.4 bps for period ended Jun 2021 vis-vis Jun 2020 .
The EPS for Jun 2021 was Rs 3.09 compared to Rs 7.53 for previous quarter ended Mar 2021 and Rs 1.3 for Jun 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 700.0 cr for period ended TTM vis-vis sales of Rs 673.0 cr for the period ended Mar 2021, a growth of 3.9%. The 3 year sales cagr stood at 4.1%.
Operating margins shrank to 28.0% for period ended TTM vis-vis 29.0% for period ended Mar 2021, contraction of 100.0 bps.
Net Profit reported at Rs 139.0 cr for period ended TTM vis-vis sales of Rs 126.0 cr for the period ended Mar 2021, rising 9.4%.
Company recorded a healthy Net Profit CAGR of 10.9% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 216.0 cr for period ended Mar 2021 vis-vis Rs 90.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 21.0% compared to 19.0% over the last 3 Years. – The stock has given a return of 300% on a 1 Year basis vis-vis a return of 44% over the last 3 Years. – The compounded sales growth on a TTM bassis is 6% vis-vis a compounded sales growth of 9% over the last 3 Years. – The compounded profit growth on a TTM basis is 76% vis-vis a compounded profit growth of 20% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has risen for the period ended Jun 2021. The Jun 2021 fii holding stood at 20.5% vis-vis 14.63% for Mar 2021 – Public shareholding has risen for the period ended Jun 2021. The Jun 2021 public holding stood at 15.97% vis-vis 11.86% for Mar 2021
Conclusion
– has reduced debt.
– is almost debt free.
– has delivered good profit growth of 35.09% CAGR over last 5 years
– has been maintaining a healthy dividend payout of 19.42% – Stock is trading at 7.35 times its book value
-Promoter holding has decreased over last quarter: -10.57%
The business fundamentals of the stock remain stable. Stronger near term results will build interest in the stock. We suggest to wait for a upturn in business performance.
Technically, the stock remains above its 50 DMA 540.92 and is trading at 700.0, thus bullish price action wise.
