This Multibagger Stock Declares Bonus Shares for January 2024

Indian benchmark indices in 2023 have been nothing less than a roller coaster ride.

The year kicked off with the Adani-Hindenburg saga, sending tremors to the market. This was further intensified by geopolitical tensions of the Canada-India spat and the Israel-Palestine conflict.

Amid this, while some stocks went downhill a few smallcap stocks saw their share price soaring high, earning the status of multibagger stocks.

One of these multibaggers was Newgen software. The company is now rewarding its shareholders with sweet rewards of bonus shares.

Bonus shares are free shares that shareholders receive against shares they currently hold.

Here's what you need to know.

• Newgen Software announced bonus shares on 28 November 2023.
• The company will issue bonus shares in a ratio of 1:1. This means one bonus share of Rs 10 each for every one existing fully paid-up equity shares they own.
• The company will issue 70 million (m) equity shares not exceeding Rs 700.6 m.
• The record date for the same is 12 January 2023.

The bonus equity shares will be issued out of the securities premium account of the company available as of 31 March 2023.

The free reserves or the share premium required for implementing the bonus issue is Rs 700.6 m, will be utilised out of the available free reserves of Rs 1 billion (bn).

Interestingly, this is the first time the company has come out with a bonus issue.

Bonus issues increase a company's share capital and liquidity while decreasing the stock price.

They are distributed out of profit reserves, free reserves, or securities premiums.

The pre-bonus paid-up share capital is Rs 700.6 m, and the post-bonus paid-up capital is Rs 1.4 bn.

In addition to this, the board of directors has approved the increase in the authorised share capital of the company from Rs 1.1 bn to Rs 1.8 m.

A Close Look at Financials

For the September 2023 quarter, the revenue of Newgen Software grew by 30% YoY to Rs 2.9 billion (bn). The net profit came in at Rs 478 m, up 58% YoY, driven by robust growth in the banking and financial services segment across geographies.

The company also said that both December and March quarters are likely to be strong for them.

Newgen Software Financial Snapshot (2019-23)

Particulars	31-Mar-19	31-Mar-20	31-Mar-21	31-Mar-22	31-Mar-23
Total Revenue (Rs in bn)	6.4	6.8	6.9	8.1	10.1
Revenue Growth (%)	-	6.3	1.4	17.4	24.7
Net profit (Rs in bn)	1	0.7	1.3	1.6	1.8
Net profit margin (%)	16.5	11	18.8	21.1	18.1

Data Source: Equitymaster

Newgen plans to launch new products and solutions in areas such as customer engagement, low-code development, and content management.

What Next?

The company has been making deeper penetration through its digital lending platform in the banking sector and has received high-value orders during the quarter as market activity picked up in this segment across different geographies.

We are becoming a preferred and trusted platform in the banking ecosystem for accelerating their business.

It is further working on expanding our market footprint through the opening of new offices.

The company takes pride in observing enterprises optimise their operations, enhance productivity, and foster collaboration through the adoption of the NewgenONE platform.

In the upcoming fiscal year, the company anticipates surpassing existing benchmarks, both in terms of product innovation and financial performance.

Presently, the company serves 51 customers with annual billing exceeding Rs 50 m, underscoring the sustained growth and value delivered to its clientele.

How Newgen Software Shares have Performed Recently

Newgen Software shares have zoomed by more than 19% in past month. Over the past six months, the company's shares have zoomed 115%.

On a YTD basis, Newgen Software's share have given a multibagger return of 286%.

Newgen Software touched its 52-week high of Rs 1.474 on 1 December 2023 while it touched a 52-week low of Rs 299.9 on 12 December 2023.

About the Company

Newgen Software is a well-known provider of a low code automation platform for digital transformation. Gartner, forester, frost and Sullivan, and IDC have all given the corporation its seal of approval.

The company provides platforms for business process management, enterprise content management, and customer communication management, with significant mission-critical solutions installed at the world's biggest banks, governments, BPOs and IT companies, insurance companies, and healthcare organisations.

To know more about the company, check out Newgen Software factsheet and its latest quarterly results.

You can compare Newgen Software with its peers:

Newgen Software vs KPIT Technologies

Newgen Software vs Infosys

Newgen Software vs Mastek

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