Newgen Software Shares Surge 35% in 3 Days: What’s Next for the IT Giant?
Shares of Newgen Software Technologies Ltd have experienced a remarkable surge, climbing over 35% in just three trading days. This significant rally has captured investor attention, pushing the stock price to new heights and sparking questions about the company’s future trajectory.
The momentum began on Thursday, where the stock gained a substantial 16.45%, closing at Rs 618. This push took the company’s market capitalization close to Rs 8,600 crore. The surge extends the winning streak to a staggering 35% from the levels seen earlier in the week. On Tuesday, the stock had hit its 52-week low at Rs 459, but the recent rebound has been dramatic.
This sharp rebound comes after a period of volatility. The company reported a 23.2% year-on-year decline in net profit for the December 2025 quarter, falling to Rs 63 crore. Revenue for the quarter remained flat at Rs 400 crore. However, earnings before interest, taxes, depreciation, and amortization (EBIT) grew by 3.1% year-on-year to Rs 97 crore, with margins expanding by 70 basis points to 24.2%.
Read More:
The recent rally appears to be driven by a combination of factors. Analysts point to a recovery from earlier concerns, particularly around artificial intelligence (AI). While AI initially caused some jitters in the IT sector, leading to a sell-off, the market now seems to be reassessing the company’s position. Newgen’s focus on AI-driven products like document understanding and process automation is seen as strengthening its long-term competitiveness.
The stock’s performance has also been influenced by execution concerns. Management had faced delays in closing large license deals, impacting growth expectations. However, analysts now forecast revenue growth normalizing to 14-15% year-on-year over the medium term.
Despite the recent gains, the stock remains significantly below its 52-week high of Rs 1,379.15 (hit in May 2025), down about 55% from that peak.
Investment banks have adjusted their outlooks. ICICI Direct, for instance, cut its FY28 earnings and revenue estimates but maintained a BUY rating. Their revised target price is Rs 770, down from an earlier Rs 1,180, reflecting a lower valuation multiple. IDBI Capital also holds a BUY rating, citing strong order pipelines and rising subscription mix as positives for medium-term recovery, though they maintain a neutral stance currently with a target of Rs 680.
The rally has been fueled by strong trading volumes. As of mid-morning on Thursday, nearly 3.45 crore shares worth over Rs 2,040 crore had changed hands on the BSE, indicating significant investor interest.
Key Points:
- Dramatic Surge: Newgen Software shares up over 35% in three days.
- Recent Performance: Stock closed at Rs 618 on Thursday, market cap near Rs 8,600 crore.
- Financial Results: Q4FY26 saw flat revenue (Rs 400 crore) but improved EBIT (Rs 97 crore) and margins (24.2%).
- Analyst Views: Mixed short-term outlook but positive medium-term potential due to AI focus and order pipelines.
- Target Adjustments: ICICI Direct lowered target to Rs 770; IDBI Capital maintains Rs 680 target.
- Volume: High trading volumes (3.45 crore shares) indicate strong investor interest.
FAQ:
- Why did Newgen Software shares surge?
- The surge is attributed to a recovery from earlier AI-related concerns, strong trading volumes, and renewed investor confidence in the company’s long-term AI-driven products and order pipelines.
- What are the concerns about the company?
- Recent concerns included delays in closing large license deals impacting growth, a decline in net profit YoY, and the stock being down significantly from its 52-week high.
- What are analysts saying?
- Analysts maintain a BUY rating but have adjusted targets downward due to near-term execution concerns. They are optimistic about medium-term recovery driven by SaaS growth and AI adoption.
- What is the future outlook?
- Analysts forecast normalized revenue growth of 14-15% YoY over the medium term. The focus is on improving Q4 performance and leveraging AI for productivity gains.
- Is the stock a good buy now?
- Analysts recommend a BUY but with caution. The high valuation relative to targets and near-term uncertainties mean investors should carefully assess their risk tolerance.
Disclaimer: This article is for informational purposes only and should not be considered investment advice. Always consult a qualified financial advisor before making investment decisions.
Read More article like this on sharepricenews.com
