Newgen Software Shares Decline 16% Over Q1 Earnings Disappointment

Newgen Software shares have declined over 16% in three days after the company's Q1FY26 earnings showed a weaker-than-expected performance. Net profit rose 4.5% YoY to Rs 49.72 crore, but revenue from operations increased only 2% YoY to Rs 321 crore. Ebitda fell 6% YoY to Rs 45 crore, and the Ebitda margin declined to 14% from 15% a year ago.

Newgen Software's share price has slumped by more than 16% in three trading sessions following the release of its Q1FY26 earnings report. The company reported a net profit of Rs 49.72 crore for the April-June quarter, marking a 4.5% year-on-year increase from Rs 47.57 crore. However, revenue from operations grew by only 2% year-on-year to Rs 321 crore, a significant drop from the previous quarter's Rs 430 crore. The company's EBITDA also decreased by 6% year-on-year to Rs 45 crore, with the EBITDA margin declining to 14% from 15% a year ago.

The weak performance was driven by sequential declines in revenue across key geographies and segments. Revenue from the India business showed a slight year-on-year increase but declined sharply from the previous quarter. Revenue from Europe fell to Rs 103.4 crore from Rs 138.56 crore quarter-on-quarter, while APAC revenue remained flat year-on-year but declined from Rs 69.2 crore in the previous quarter. Revenue from the US market was also flat year-on-year but lower sequentially.

Despite the mixed performance, Newgen Software's subscription revenue rose by 19% year-on-year to Rs 121 crore, indicating strength in its annuity streams. The company added 12 new customer logos and received its 25th patent during the quarter.

Analysts have noted the mixed performance, with resilient subscription growth offset by weakness in international segments. SEBI-registered analyst Vishal Trehan highlighted the company's continued focus on AI-driven platforms like Marvin and Harper as a strategic priority. Another analyst, Vijay Kumar Gupta, pointed to a clear technical breakdown, with the stock posting a bearish engulfing candle and breaching multiple support levels. Gupta identified Rs 940-950 as a crucial support zone and suggested that unless the stock reclaims Rs 1,020 with strong volume, further downside cannot be ruled out.

Newgen Software shares have dropped 29% over the past six months and are down 46% so far this year. The company's current market capitalisation stands at Rs 13,058 crore. According to Trendlyne, the average target price for Newgen Software is Rs 1,091, suggesting an upside potential of nearly 18% from current levels. Of the five analysts covering the stock, the consensus rating is 'Buy'.

[1] https://m.economictimes.com/markets/stocks/news/newgen-software-shares-slide-over-16-in-three-days-after-weak-q1-earnings/articleshow/122808217.cms
[2] https://economictimes.indiatimes.com/markets/stocks/news/newgen-software-shares-slide-over-16-in-three-days-after-weak-q1-earnings/articleshow/122808217.cms
[3] https://stocktwits.com/news-articles/markets/equity/newgen-software-shares-slump-on-weak-q1/ch8k1kxR5pU