NEWGEN SOFTWARE 2020-21 Annual Report Analysis

Wed, 31 Mar

NEWGEN SOFTWARE has announced its results for the year ended March 2021. Let us have a look at the detailed performance review of the company during FY20-21.

NEWGEN SOFTWARE Income Statement Analysis

• Operating income during the year rose 1.8% on a year-on-year (YoY) basis.
• The company's operating profit increased by 83.5% YoY during the fiscal. Operating profit margins witnessed a fall and down at 28.5% in FY21 as against 15.8% in FY20.
• Depreciation charges increased by 1.2% and finance costs decreased by 48.4% YoY, respectively.
• Other income declined by 28.3% YoY.
• Net profit for the year grew by 73.9% YoY.
• Net profit margins during the year grew from 11.0% in FY20 to 18.8% in FY21.

NEWGEN SOFTWARE Income Statement 2020-21

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Net Sales	Rs m	6,608	6,726	1.8%
Other income	Rs m	210	150	-28.3%
Total Revenues	Rs m	6,817	6,877	0.9%
Gross profit	Rs m	1,046	1,919	83.5%
Depreciation	Rs m	199	202	1.2%
Interest	Rs m	109	56	-48.4%
Profit before tax	Rs m	947	1,812	91.2%
Tax	Rs m	220	547	148.5%
Profit after tax	Rs m	727	1,265	73.9%
Gross profit margin	%	15.8	28.5
Effective tax rate	%	23.2	30.2
Net profit margin	%	11.0	18.8

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NEWGEN SOFTWARE Balance Sheet Analysis

• The company's current liabilities during FY21 down at Rs 2 billion as compared to Rs 3 billion in FY20, thereby witnessing an decrease of -22.9%.
• Current assets rose 8% and stood at Rs 6 billion, while fixed assets fell 16% and stood at Rs 3 billion in FY21.
• Overall, the total assets and liabilities for FY21 stood at Rs 10 billion as against Rs 10 billion during FY20, thereby witnessing a fall of 1%.

NEWGEN SOFTWARE Balance Sheet as on March 2021

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Networth	Rs m	5,450	6,623	21.5
Current Liabilities	Rs m	2,756	2,124	-22.9
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	9,685	9,553	-1.4
Current assets	Rs m	6,027	6,489	7.7
Fixed Assets	Rs m	3,658	3,064	-16.2
Total Assets	Rs m	9,685	9,553	-1.4

NEWGEN SOFTWARE Cash Flow Statement Analysis

• NEWGEN SOFTWARE's cash flow from operating activities (CFO) during FY21 stood at Rs 2 billion, an improvement of 139.5% on a YoY basis.
• Cash flow from investing activities (CFI) during FY21 stood at Rs -1 billion, an improvement of 37.5% on a YoY basis.
• Cash flow from financial activities (CFF) during FY21 stood at Rs -1 billion on a YoY basis.
• Overall, net cash flows for the company during FY21 stood at Rs -284 million from the Rs -576 million net cash flows seen during FY20.

NEWGEN SOFTWARE Cash Flow Statement 2020-21

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-20	Mar-21
Cash Flow from Operating Activities	Rs m	901	2,157	139.5%
Cash Flow from Investing Activities	Rs m	-1,040	-1,430	-
Cash Flow from Financing Activities	Rs m	-472	-1,023	-
Net Cash Flow	Rs m	-576	-284	-

Current Valuations for NEWGEN SOFTWARE

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 18.2, an improvement from the EPS of Rs 10.5 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 283.3, stands at 15.7 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 3.0 times, while the price to sales ratio stands at 2.9 times.
• The company's price to cash flow (P/CF) ratio stood at 10.3 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*
Sales per share (Unadj.)	Rs	95.6	97.0
TTM Earnings per share	Rs	10.5	18.2
Diluted earnings per share	Rs	10.4	18.1
Price to Cash Flow	x	7.8	10.3
TTM P/E ratio	x	9.9	15.7
Price / Book Value ratio	x	3.0	2.3
Market Cap	Rs m	16,139	15,060
Dividends per share (Unadj.)	Rs	2.0	3.5

Ratio Analysis for NEWGEN SOFTWARE

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 3.1x during FY21, from 2.2x during FY20. The current ratio measures the company's ability to pay short-term and long-term obligations.

Interest Coverage Ratio: The company's interest coverage ratio improved and stood at 33.2x during FY21, from 9.7x during FY20. The interest coverage ratio of a company states how easily a company can pay its interest expense on outstanding debt. A higher ratio is preferable.

• Profitability Ratios

Return on Equity (ROE): The ROE for the company improved and stood at 19.1% during FY21, from 13.3% during FY21. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

Return on Capital Employed (ROCE): The ROCE for the company improved and stood at 28.2% during FY21, from 19.4% during FY20. The ROCE measures the ability of a firm to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

Return on Assets (ROA): The ROA of the company improved and stood at 13.8% during FY21, from 8.6% during FY20. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*
Current ratio	x	2.2	3.1
Debtors’ Days	Days	1,488	1,294
Interest coverage	x	9.7	33.2
Debt to equity ratio	x	0.0	0.0
Return on assets	%	8.6	13.8
Return on equity	%	13.3	19.1
Return on capital employed	%	19.4	28.2

To see how NEWGEN SOFTWARE has performed over the last 5 years, please visit here.

NEWGEN SOFTWARE Share Price Performance

Over the last one year, NEWGEN SOFTWARE share price has moved up from Rs 102.7 to Rs 283.3, registering a gain of Rs 180.6 or around 175.9%.

Meanwhile, the S&P BSE IT Index is trading at Rs 26,543.2 (down 0.7%). Over the last one year it has moved up from 12,842.7 to 26,543.2, a gain of 13,701 points (up 106.7%).

Overall, the S&P BSE SENSEX is up 74.1% over the year.

(To know more, check out historical annual results for NEWGEN SOFTWARE and quarterly results for NEWGEN SOFTWARE)

Read: Latest Annual Report Analysis of NEWGEN SOFTWARE