Newgen Software shares rise over 4% on stock market debut

Newgen Software IPO was subscribed more than eight times during its share sale from 16-18 January, with a price band of Rs240-245 per share.

Newgen Software IPO was subscribed more than eight times during its share sale from 16-18 January, with a price band of Rs240-245 per share.

Mumbai: Newgen Software Technologies made a firm stock market debut on Monday. The technology firm was listed at Rs253, up from its issue price of Rs245 per share on the BSE. The initial public offering (IPO) was subscribed more than eight times during its share sale from 16-18 January, with a price band of Rs240-245 per share.

The stock was trading at Rs255.60 on the BSE, up 4.3% from its issue price. India’s benchmark Sensex index rose 0.83% to 36,351.32 points.

Analysts were divided about the valuations of Newgen Software Technologies ahead of its share sale. According to Angel Broking Pvt. Ltd, in terms of valuations, the pre-issue price to earnings (PE) works out to 274 times its first half of FY2018 annualized earnings which is higher compared to its peers like Intellect Design Arena (trading at 143 times first half of FY2018 annualized earnings).

The brokerage firm had said that Newgen was able to report only single-digit bottom-line compounded annual growth rate (CAGR) of 8% despite a topline CAGR of 20% over FY13-17 due to lack of stability in operating margins.

However, Emkay Global Financial Services Ltd said that high PE is justified as the company is expected to command high-growth premium and strong potential of improved profitability going forward.

The software products company had raised around Rs127.39 crore by selling shares to institutional investors as part of its anchor book allocation. Proceeds of the issue will be used to purchase and furnish office premises near Noida-Greater Noida Expressway and for general corporate purposes.

Newgen Software Technologies is a New Delhi-based software company and a global provider of BPM, ECM, customer communication management (CCM), document management system (DMS), workflow and process automation. It has over 450 active customers, with clients spread over 60 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.

Few of its clients include Trust Company of America, Mercantil Bank, ICICI Bank, United Arab Bank, Axis Bank, Yes Bank, Kotak Mahindra Bank, ICICI Prudential Life Insurance, Reliance General Insurance, Max Life Insurance and Shriram Transport Finance.

[“Source-livemint”]