NEWGEN SOFTWARE 2021-22 Annual Report Analysis

Tue, 31 May

NEWGEN SOFTWARE has announced its results for the year ended March 2022. Let us have a look at the detailed performance review of the company during FY21-22.

NEWGEN SOFTWARE Income Statement Analysis

• Operating income during the year rose 15.8% on a year-on-year (YoY) basis.
• The company's operating profit increased by 1.4% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 25.0% in FY22 as against 28.5% in FY21.
• Depreciation charges decreased by 12.5% and finance costs decreased by 37.9% YoY, respectively.
• Other income grew by 98.9% YoY.
• Net profit for the year grew by 29.8% YoY.
• Net profit margins during the year grew from 18.8% in FY21 to 21.1% in FY22.

NEWGEN SOFTWARE Income Statement 2021-22

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Net Sales	Rs m	6,726	7,790	15.8%
Other income	Rs m	150	299	98.9%
Total Revenues	Rs m	6,877	8,089	17.6%
Gross profit	Rs m	1,919	1,947	1.4%
Depreciation	Rs m	202	176	-12.5%
Interest	Rs m	56	35	-37.9%
Profit before tax	Rs m	1,812	2,035	12.3%
Tax	Rs m	547	392	-28.2%
Profit after tax	Rs m	1,265	1,642	29.8%
Gross profit margin	%	28.5	25.0
Effective tax rate	%	30.2	19.3
Net profit margin	%	18.8	21.1

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NEWGEN SOFTWARE Balance Sheet Analysis

• The company's current liabilities during FY22 stood at Rs 2 billion as compared to Rs 2 billion in FY21, thereby witnessing an increase of 12.4%.
• Long-term debt stood at Rs 43 million as compared to Rs 0 million during FY21, a fall of 0.0%.
• Current assets rose 15% and stood at Rs 7 billion, while fixed assets rose 58% and stood at Rs 5 billion in FY22.
• Overall, the total assets and liabilities for FY22 stood at Rs 12 billion as against Rs 10 billion during FY21, thereby witnessing a growth of 29%.

NEWGEN SOFTWARE Balance Sheet as on March 2022

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Networth	Rs m	6,623	8,038	21.4
Current Liabilities	Rs m	2,124	2,388	12.4
Long-term Debt	Rs m	0	43	0.0
Total Liabilities	Rs m	9,553	12,311	28.9
Current assets	Rs m	6,489	7,463	15.0
Fixed Assets	Rs m	3,064	4,847	58.2
Total Assets	Rs m	9,553	12,311	28.9

NEWGEN SOFTWARE Cash Flow Statement Analysis

• NEWGEN SOFTWARE's cash flow from operating activities (CFO) during FY22 stood at Rs 1 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY22 stood at Rs -806 million on a YoY basis.
• Cash flow from financial activities (CFF) during FY22 stood at Rs -320 million, an improvement of 69% on a YoY basis.
• Overall, net cash flows for the company during FY22 stood at Rs 319 million from the Rs -284 million net cash flows seen during FY21.

NEWGEN SOFTWARE Cash Flow Statement 2021-22

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-21	Mar-22
Cash Flow from Operating Activities	Rs m	2,157	1,428	-33.8%
Cash Flow from Investing Activities	Rs m	-1,430	-806	-
Cash Flow from Financing Activities	Rs m	-1,023	-320	-
Net Cash Flow	Rs m	-284	319	-

Current Valuations for NEWGEN SOFTWARE

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 23.6, an improvement from the EPS of Rs 18.2 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 386.5, stands at 16.5 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 3.4 times, while the price to sales ratio stands at 3.4 times.
• The company's price to cash flow (P/CF) ratio stood at 19.9 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Sales per share (Unadj.)	Rs	97.0	112.0
TTM Earnings per share	Rs	18.2	23.6
Diluted earnings per share	Rs	18.1	23.5
Price to Cash Flow	x	13.5	19.9
TTM P/E ratio	x	15.7	16.5
Price / Book Value ratio	x	2.3	4.5
Market Cap	Rs m	15,060	36,150
Dividends per share (Unadj.)	Rs	3.5	4.5

Ratio Analysis for NEWGEN SOFTWARE

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 3.1x during FY22, from 3.1x during FY21. 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 59.3x during FY22, from 33.2x during FY21. 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 20.4% during FY22, from 19.1% during FY22. 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 declined and down at 25.6% during FY22, from 28.2% during FY21. 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 declined and down at 13.6% during FY22, from 13.8% during FY21. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Current ratio	x	3.1	3.1
Debtors’ Days	Days	1,294	1,307
Interest coverage	x	33.2	59.3
Debt to equity ratio	x	0.0	0.0
Return on assets	%	13.8	13.6
Return on equity	%	19.1	20.4
Return on capital employed	%	28.2	25.6

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 down from Rs 412.7 to Rs 386.5, registering a loss of Rs 26.2 or around 6.3%.

Meanwhile, the S&P BSE IT Index is trading at Rs 30,214.6 (down 0.0%). Over the last one year it has moved up from 27,584.8 to 30,214.6, a gain of 2,630 points (up 9.5%).

Overall, the S&P BSE SENSEX is up 9.3% 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