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ICICI Securities Report
Newgen Software Technologies Ltd.’s headroom for margin expansion (implying Ebit growth of 25% in FY21E) has been our key investment rationale, despite an expected revenue decline (down 2.5% in FY21E).
As anticipated, while revenue in H1 FY21 remained largely flat (YoY), margin improved (from 2.5% in H1 FY20 to 16% H1 FY21).
U.S./Asia Pacific revenue grew 11%/39% YoY, respectively, with the company targeting 20-25 new customers in the U.S. (excluding paycheck protection program in FY21).
The company continues to invest aggressively across research and development, sales and marketing and senior leadership roles with expenses aggregating to approximately 25% of revenues in Q2.
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