Newgen Software Technologies Limited

Technology — Software - Infrastructure · NSE

₹495.00+₹5.40 (+1.10%)

DalalBaazaar Score

75 / 100

🟢 Good

Verdict

REASONABLE

Risk

Moderate

Driven by high debt relative to equity, small-cap size, which brings sharper price swings.

In simple words: Strong business and financial position, with both sales and profits growing well. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:07 pm

Mixed / neutral. No major red flags jump out, but nothing here screams "obviously cheap" either. This is a name that needs a peer comparison and a view on near-term earnings triggers before sizing a position.

Understanding the Business

Company site ↗

The 60-second version of Newgen Software Technologies Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Newgen Software Technologies Limited, a software company, engages in the business of software product development in India, Europe, the Middle East, Africa, the Asia Pacific, Australia, and the United States.

IndustrySoftware - Infrastructure

SectorTechnology

Employees3,788

Annual revenue₹1,574 Cr

How does it make money?

Turns over ₹1,574 Cr a year. Of every ₹100 of sales, about ₹19 reaches shareholders as profit, with ₹28 left at the operating level before interest, tax and depreciation. Each of its 3,788 employees supports ₹41.6 lakh of revenue a year, the signature of a people-led business.

EBITDA margin28.2%

Net margin19.1%

Revenue / employee₹41.6 lakh

Who are its competitors?

The closest listed comparisons in its industry are TATA CONSULTANCY SERV LT, INFOSYS LIMITED, HCL TECHNOLOGIES LTD, WIPRO LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

TATA CONSULTANCY SERV LTP/E 17.3x · ROE 45.6%

INFOSYS LIMITEDP/E 15.8x · ROE 32.0%

HCL TECHNOLOGIES LTDP/E 20.4x · ROE 24.6%

WIPRO LTDP/E 14.5x · ROE 15.9%

What is its competitive advantage?The numbers suggest a real one

ROCE has stayed above 15% in every year available and stands at 20.7%. Returns that high normally get competed away; when they persist, something is protecting them, and its ROE of 16.9% against a peer median of 32.0% is consistent with that. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

ROCE20.7%

ROE16.9%

Peer median ROE32.0%

What is the outlook?

5 analysts covering the stock expect revenue to grow about 13.7% and earnings to grow about 13.9% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+13.7%

Est. earnings growth+13.9%

Analysts5

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +62% while net margin moved +5% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+62%

Margin effect+5%

DalalBaazaar Score

75/ 100

Good

Weighted across six categories. Every point is explained below.

✓ Beta of 0.55 — historically steadier than the index
✗ Small Cap: thinner liquidity and sharper drawdowns are normal
✗ High leverage magnifies any downturn in earnings
✓ Profits have been consistent from year to year

Quality vs. Valuation

Company Quality

78/ 100

Good

How good the business is, ignoring the share price entirely.

Valuation

56/ 100

Fair

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

22.5x

3Y Median

59.9x

40 monthly readings · mean 68.2x · range 18.4x–164.0x

Sector Median

16.5x

median of 4 sector peers

🟢Current valuation is approximately 62% below its 3y median of 59.9x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

⚠️Against its sector it trades 36% above the peer median of 16.5x.

vs. its own history

Cheap

59.9x median over 40 months · -62%

vs. sector peers

Expensive

16.5x median of 4 peers · +36%

vs. generic bands

Fair

15x–35x

P/E (Trailing)

22.5x

P/B

3.93x

EV/EBITDA

15.6x

PEG

1.17

Dividend Yield

1.21%

What's Good / What's Bad

🟢 What's Going Well5

Margins are improving
EBITDA margin is up from 24.9% to 28.2% over 3 years.
Cash generation is improving
Free cash flow is up 86% over 3 years.
High return on capital employed
ROCE of 20.7% is the mark of a business that converts capital into profit efficiently.
Valuation below its historical average
At 22.5x the stock trades 62% below its own median of 59.9x.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention1

Receivables growing faster than sales
Receivables are up 82% against revenue growth of 62% — customers are taking longer to pay.

Red Flags

2 items require attention · 1 high · 1 watch

🔴High leverageFinancial
Debt/Equity of 2.21x — earnings must service borrowings before shareholders see anything.
🟡Receivables growing faster than salesFinancial
Receivables up 82% against revenue up 62% — sales are being booked faster than they are collected.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 20.7% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
Margin expansion has further to run
EBITDA margin has risen from 24.9% to 28.2%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Priced below its own history
The stock trades 62% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Leverage amplifies any setback
Debt/Equity of 2.21x. Interest is payable whether or not the business has a good year.
Sales are being booked faster than collected
Receivables are up 82% against revenue up 62%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
A premium to the sector to defend
It trades 36% above the peer median. That premium needs a reason that persists, or it closes.
Size brings its own risk
Small Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 13% a year✓ 17.4% CAGR
Latest reported year was 11.2%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 26%✓ 28.2%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✓ ₹222 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.1x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 18%✓ 20.7%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

10 / 12 checks passed

✓ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

6 good · 4 neutral · 1 weak

Market Cap

₹6,997 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

22.5x

Fair

Fairly valued against the generic band

P/B Ratio

3.93x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹21.98

Profitable

Profitable on a per-share basis

ROE

16.9%

Strong

Strong capital efficiency

ROCE

20.7%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

2.21x

High

High leverage

Revenue Growth (YoY)

11.2%

Healthy

Healthy top-line growth

Profit Growth (YoY)

27.8%

Healthy

Profits growing at a healthy clip

Dividend Yield

1.21%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹222 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹495

P/E (Forward)

17.0x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

13.1%

Average

Average margins

Net Margin

19.5%

Good

Strong bottom-line conversion

Current Ratio

3.66

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.55

Defensive

Steadier than the market

52W Range Position

15%

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

473.8 / 505.3

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

54.1

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹974 Cr	₹1,244 Cr	₹1,487 Cr	₹1,574 Cr	+17.4%
EBITDA	₹243 Cr	₹319 Cr	₹409 Cr	₹444 Cr	+22.2%
EBITDA Margin	24.9%	25.7%	27.5%	28.2%	—
PAT (Net Profit)	₹177 Cr	₹252 Cr	₹315 Cr	₹301 Cr	+19.3%
EPS	₹6.28	₹17.5	₹21.89	₹21.24	+50.1%
ROE	18.0%	20.6%	20.8%	16.9%	—
ROCE	21.1%	23.5%	25.2%	20.7%	—
Total Debt	₹43 Cr	₹49 Cr	₹53 Cr	₹39 Cr	-2.7%
Free Cash Flow	₹120 Cr	₹268 Cr	₹192 Cr	₹222 Cr	+22.9%

🟢 Revenue has grown at 17.4% a year over 3 years.

🟢 EBITDA has grown at 22.2% a year over 3 years.

🟢 EBITDA Margin has risen from 24.9% to 28.2% over 3 years (+3.2 pts).

🟢 PAT (Net Profit) has grown at 19.3% a year over 3 years.

🟢 EPS has grown at 50.1% a year over 3 years.

🔴 ROE has fallen from 18.0% to 16.9% over 3 years (-1.1 pts).

🟡 ROCE has held roughly flat at 20.7% over 3 years.

🟢 Total Debt has shrunk at 2.7% a year over 3 years.

🟢 Free Cash Flow has grown at 22.9% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹2,442 Cr

Total Liabilities

₹665 Cr

Total Debt

₹39 Cr

Cash & Equivalents

₹104 Cr

Operating Cash Flow

₹232 Cr

Capex

-₹10 Cr

Shareholding (proxy)

Institutional Holding

8.6%

Insider Holding

63.4%

Corporate Actions

Dividend Rate

₹6

Ex-Dividend Date

17 Jul 2026

Analyst Consensus

Recommendations

4 Buy · 2 Hold · 0 Sell

Target Price (Mean)

₹615

+24.2% vs CMP

Target Range

₹560 – ₹670

Peer Comparison

Company	P/E	ROE
TATA CONSULTANCY SERV LT	17.3x	45.6%
INFOSYS LIMITED	15.8x	32.0%
HCL TECHNOLOGIES LTD	20.4x	24.6%
WIPRO LTD	14.5x	15.9%

Recent News

3 mixed1 negative2 general

Mid-Cap IT Stock Newgen Software Surges 18%, Extends 3-Day Rally to 35%; Analysts See More Upside Ahead

Goodreturns, 18 OctAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Newgen Software Technologies (NSEI:NEWGEN) Stock Forecast & Analyst Predictions

Simply Wall Street, 02 OctAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Newgen Software Technologies Ltd. Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 30 Aug

Newgen Software Q1 FY27 results: Net profit dips 41%, revenue falls to ₹453 crore QoQ; shares slip 6%

Upstox, 16 JulResults

🔴Potentially negativeReported deterioration, which feeds the growth and margin inputs on this page directly.

Newgen Software EVP Surender Jeet Raj retires as KMP

scanx.trade, 12 Oct

Newgen Software Wins $5.48 Million US Deal; Shares Fall 1.37%

HDFC Sky, 29 SeptPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

🟢Business QualityStrong16.7/20

🟢Financial HealthStrong13.9/20

🟢GrowthStrong14.9/20

🟢ProfitabilityStrong12.8/15

🟢ValuationAttractive10.7/15

🟡RiskModerate5.7/10

Good business at a fair price

A sound business at a reasonable valuation. Suitable for a long-term holding, with the valuation and the direction of margins worth watching rather than the business itself. 1 high-severity red flag sits above this conclusion and should be read first.

This thesis breaks if

✓Revenue growth stays above 13% a year17.4% CAGR
✓EBITDA margin holds above 26%28.2%
✓Free cash flow remains positive₹222 Cr
✓Debt / EBITDA stays below 2x0.1x
✓ROCE stays above 18%20.7%