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- 03 May 2023
- ICICIdirect Research
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NEWGEN ENDS FY23 WITH 25% REVENUE GROWTH, EXPECTED TO CONTINUE GROWTH MOMENTUM IN FY24
NEWGEN - 963 Change: -63.00 (-6.14 %)News: Newgen reported 31.8% YoY revenue growth in Q4 with revenue of Rs 305.1 crore. Subscription revenue, 9.7% of mix, grew 66.6% YoY while annuity based revenue (SaaS, ATS/AMC & Support), forming 54.5% of revenue mix, grew 32.4% YoY. Geography wise US region (24.6% of mix) grew 39.9% YoY while India & EMEA grew by 37.9% and 33.8%, respectively. Vertical wise BFS (71% of mix) grew 39.7% YoY. The EBITDA margin increased 850 bps QoQ to 31.6% due to strong revenue growth posted by the company. For FY23, the company reported revenue of Rs 974 crore, up 25%. SaaS revenue & annuity based revenue grew 61.5% and 30.3%, respectively. The company reported an EBITDA margin of 21.8% in FY23 due to higher employee cost and higher other expenses with resumption of higher travel cost & other expenses. The company in FY23 added 47 new clients during the year. The company, for the first time reported total bookings number of Rs 1,290.5 crore. The company declared a final dividend of Rs 5 per share
View: The company has guided for similar growth in FY24 as that of FY23 i.e 25% due to increase in deal sizes as they continue to chase bigger customers. Assuming strong growth rates for next 2 years and guided PAT margins range will likely help company to post 20%+ CAGR earnings for FY23-25. We are of the view that stock re-rating likely to continue, may not be in an accelerated manner now due to recent sharp run up (stock is up 62% since November 2022) but could be in a gradual manner. The stock is still trading at some discount to long term average and potentially provide some more upside even from this level in our view
Impact: Positive