Friday, January 12, 2018

IPO ANALYSIS : NEWGEN SOFTWARE TECHNOLOGIES - ATTRACTIVELY PRICED -INVEST


Issue Details :


Issue opens  / closes on
06-01 /18-01-2018
Issue size
Fresh issue of up to Rs 95 Cr and an offer for sale up-to 13,453,932 Equity Shares
Face value
Rs 10
Price band
Rs 240-245
Promoters
DIWAKAR NIGAM AND T.S. VARADARAJAN
Business
Software developers - ECM/ CCM /BPM
Listings
Bse, Nse
BRLM
ICICI Securities, Jefferies, IDFC Bank
Registrar
KARVY

BUSINESS :


Newgen is an  software products company offering a platform that enables organisations to rapidly develop powerful applications addressing their strategic business needs. The applications created on the platform enable organisations to drive digital transformation and competitive differentiation.
Enterprise Content Management (ECM)


Enterprise Content Management Software allows digitisation of enterprise content and information.


Business Process Management (BPM):
OmniFlow Intelligent Business Process Suite (OmniFlow iBPS) is an integrated system which allows enterprises to manage a complete range of business processes.


Customer Communication Management (CCM):  Customer Communication Management suite offers a unified communication platform that allows enterprises to improve communication with their customers by delivering a personalised, targeted and consistent communication through various channels.


OBJECTS OF THE OFFER :


Offer for Sale The Offer includes an Offer for Sale of 13,453,932 Equity Shares by the Selling Shareholders. The Company will not receive any proceeds from the Offer for Sale by the Selling Shareholders.


Of the Fresh Issue, funds will be utilized for : 1. Purchase and furnishing of office premises in Noida. 2. General corporate purposes.


FAVORABLE POINTS :


1   Software product company with industry analyst recognition.
2.  Diversified business across several verticals.
3.  Diversified revenue streams from multiple geographies with low customer concentration.
4. Experienced senior management team.


FINANCIALS :  ( Rs in Crores, except EPS)



31-03-2017
31-03-2016
31-03-2015
Equity
63.38
63.09
63.06
Revenue
390
315
286
Net profit
50.15
27.65
42.79
EPS
10.09
4.66
7.31


RISK FACTORS :


  1. Success depends upon the ability to develop new products and services and enhance the existing products and services.
  2. The Company in the past been non-compliant with certain provisions of the Companies Act.
  3. Fluctuations in foreign currency exchange rates could materially affect the financial results.
  4. High level of debtors. On a revenue of Rs 383 Cr for FY 17, the total debtors outstanding is Rs 225 Cr, average outstanding of almost 200 days. It is an indication that products are not in hot demand and limited client base.

VALUATION AND RECOMMENDATIONS :


There are no listed entities which are similar to the line of business and comparable to the scale of operations.  Based on FY17 earnings, the offer is made around 25 PE, which is attractive.


Invest for listing gains.

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