![](AngelBrokingResearch_Newgen Software Technologies _IPO_12012018_files\bg1.png)
Please refer to important disclosures at the end of this report
1
Incorporated in 1992, Newgen Software Technologies Limited (NSTL) is a
Delhi based IT company and
a global provider of Business Process Management
(BPM), Enterprise Content Management (ECM), Customer Communication
Management (CCM), Document Management System (DMS), Workflow and
Process Automation. NSTL has 450+ active customers, with clients spread over
countries. The company sells its products to banks, insurance firms, BPOs and
healthcare organizations. It has offices in the US, Canada, the United Kingdom,
Singapore, and Dubai.
Positives: (a) Diversified business across several verticals including
Government/PSUs, BPO/IT, Insurance and Healthcare (b)
streams from multiple geographies with low customer concentration (c)
and non-recurring repeat revenues from long standing customer relationships
Focused on driving innovation through in-house R&D.
Investment concerns: (a) NSTL was able to report only single digit bottom-
CAGR of ~8% despite a top-line CAGR ~20% over FY13-17, due to lack of
stability in operating margins (b) During 1HFY18, the company
low margin and profitability (c) working capital days are very high
Outlook & Valuation: In terms of valuations, the pre-
issue P/E works out to 274x its
1HFY2018 annualized earnings (at the upper end of the issue price band), which is
higher compared to its peers like Intellect Design Arena (trading at PE 143x -
1HFY2018 annualized earnings).
Further last four years historical financial records
and 1HFY18 doesn’t provides confidence.
Hence, we recommend Neutral rating
on the issue.
Key Financials
Y/E March (` cr) FY2015 FY2016 FY2017 1HFY18
Net Sales 308 347 427 207
% chg 24.2 12.4 23.2 -
Net Profit 46 28 52 6
% chg 12.9 (40.0) 88.2 -
OPM (%) 18.7 11.3 16.4 4.6
EPS (Rs) 7.1 4.3 8.0 0.9
P/E (x) 34.5 57.6 30.6 -
P/BV (x) 7.6 7.0 5.8 -
RoE (%) 21.9 12.1 19.1 -
RoCE (%) 20.9 12.1 19.9 -
EV/Sales (x) 5.1 4.6 3.7 -
EV/EBITDA (x) 27.1 40.5 22.4 -
Angel Research; Note: Valuation ratios based on pre-issue outstanding shares and at upper end
of the price band
Neutral
Issue Open: Jan 16, 2018
Issue Close: Jan 18, 2018
QIBs 50% of issue
Non-Institutional 15% of issue
Retail 35% of issue
Promoters
66.3%
Others
33.7%
Post Issue Shareholding Pattern
Post Eq. Paid up Capital: `69.2cr
Issue size (amount): **`425
for sale -
`
330)
Price Band: `240-245
Lot Size: 61 shares and in multiple
thereafter
Post-issue implied mkt. cap: *`1,662cr -
**`1,696cr
Promoters holding Pre-Issue: 70.3
%
Promoters holding Post-Issue: 66.3
%
*Calculated on lower price band
** Calculated on upper price band
Book Building
Fresh issue: `95cr
Issue Details
Face Value:
`10
Present Eq. Paid up Capital: `65.4cr
Amarjeet S Maurya
+022 39357600, Extn: 6831
amarjeet.maurya@angelbroking.com
Newgen Software Technologies Ltd
IPO Note |