Results: Newgen Software Technologies Limited Exceeded Expectations And The Consensus Has Updated Its Estimates
Investors in Newgen Software Technologies Limited (NSE:NEWGEN) had a good week, as its shares rose 5.9% to close at ₹548 following the release of its quarterly results. Revenues were ₹3.6b, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of ₹4.41 were also better than expected, beating analyst predictions by 13%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the most recent consensus for Newgen Software Technologies from seven analysts is for revenues of ₹17.4b in 2027. If met, it would imply a modest 7.8% increase on its revenue over the past 12 months. Per-share earnings are expected to step up 16% to ₹25.80. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹17.5b and earnings per share (EPS) of ₹26.23 in 2027. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
See our latest analysis for Newgen Software Technologies
There were no changes to revenue or earnings estimates or the price target of ₹683, suggesting that the company has met expectations in its recent result. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Newgen Software Technologies, with the most bullish analyst valuing it at ₹1,125 and the most bearish at ₹560 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Newgen Software Technologies' revenue growth will slow down substantially, with revenues to the end of 2027 expected to display 11% growth on an annualised basis. This is compared to a historical growth rate of 18% over the past five years. Compare this to the 77 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 12% per year. Factoring in the forecast slowdown in growth, it looks like Newgen Software Technologies is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at ₹683, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Newgen Software Technologies going out to 2029, and you can see them free on our platform here..
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Newgen Software Technologies , and understanding them should be part of your investment process.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.