NEWGEN SOFTWARE 2020-21 Annual Report Analysis

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NEWGEN SOFTWARE 2020-21 Annual Report Analysis
Fri, 29 Oct

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 10.7% in FY20 to 18.4% 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 % 10.7 18.4
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



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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
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



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 -
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



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 566.0, stands at 26.9 times its trailing twelve months earnings.
  • The price to book value (P/BV) ratio at current price levels stands at 2.3 times, while the price to sales ratio stands at 2.2 times.
  • The company's price to cash flow (P/CF) ratio stood at 27.0 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 42.2 27.0
TTM P/E ratio x 26.6 26.9
Price / Book Value ratio x 3.0 2.3
Market Cap Rs m 39,105 39,595
Dividends per share (Unadj.) Rs 2.0 3.5
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



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
* Results Consolidated
Interim results exclude extraordinary / exceptional items
Source: Accord Fintech, Equitymaster



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 245.7 to Rs 566.0, registering a gain of Rs 320.3 or around 130.4%.

Meanwhile, the S&P BSE IT Index is trading at Rs 33,491.4 (down 1.6%). Over the last one year it has moved up from 21,060.9 to 33,491.4, a gain of 12,431 points (up 59.0%).

Overall, the S&P BSE SENSEX is up 46.4% over the year.

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

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