- 19 Jul 2024
- ICICI Securities
STRONG PERFORMANCE IN A SEASONALLY SOFT QUARTER
NEWGEN - 1024 Change: 30.55 (3.08 %)News: The company reported 25.1% YoY revenue growth driven by growth across all geographies to ₹314.7 crore though it declined 16% sequentially due to seasonal weakness in Q1. Subscription revenues (ATS/AMC +SaaS) reported 14.3% YoY revenue growth wherein SaaS revenue grew by 25.1% YoY while ATS/AMC grew by 9.4% YoY. Annuity revenues (ATS/AMC+ SaaS+ Support) reported healthy growth of 21.3% YoY to ₹201.4 crore. License revenue was however relatively weak due to its seasonal nature and it reported a growth of 3% YoY to ₹44.1 crore. The company added 13 new logos during the quarter. EBITDA increased 48.4% YoY to ₹47.6 crore while EBITDA margins were up ~240 bps YoY to 15.1%. The company reported PAT of ₹47.6 crore while the PAT margin came at 15.1%, up 26% YoY. The PAT growth was aided by higher Other Income which was partly offset by higher taxes. The company declared an interim dividend of ₹4 per share.
Views: The company reported a strong performance in Q1 despite it being a seasonally weak quarter due to license nature of the business historically. Revenues grew across segments as annuity, SaaS and subscription revenues continued to show growth momentum. The management highlighted that trade, lending, and supply chain finance solutions are receiving good traction and market acceptance. On the GenAI front, the company launched a new product named “Newgen LumYn” which is a Gen AI-powered hyper-personalization platform designed specifically for the banking sector. The company has committed to investing 20-24% of EBITDA in growth initiatives, adapting strategies based on market conditions.
Impact: Positive