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Newgen Software Technologies Ltd. has an integrated software business of content and process which distinguishes it from peers. In addition, higher annuity revenues (60%) and exposure to banking, financial services and insurance (70%) will help the company in fending of macro issues.
Newgen Software aspires to grow at 20% compound annual growth rate over the next few years and with global system integrators has aspiration of $500 million in five years. We have conservatively built 16% CAGR revenue growth over FY22-25E.
Further, longer term focus on developed markets and subscription revenue will result in lower DSO leading to better cash flow. Partnership with GSIs, expansion in mature markets and higher annuity revenues will boost profitability. Hence, we estimate profits to increase at 16% CAGR in FY22-25.
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