The IPO of Newgen Software Technologies, which opened today, was subscribed 19% as of early evening. The issue that is expected to receive funds inflow of Rs 425 crore with the upper band fixed at Rs 240-245 per share will end on January 18. Investors can subscribe in lots of 61 and multiples thereon with a minimum investment restricted to Rs 2 lakhs in retail sector category and beyond Rs 2 lakhs in non-institutional category. The issue proceeds will go towards the building of office premises in the Noida—Greater Noida Expressway in UP and for addressing other corporate needs.
Organizations aiming for digitization to get the competitive edge can take advantage of the applications platform offered by the company. The company services 450 customers (as per previous 12 months invoices) in more than 60 countries as of September 30, 2017. The company has strong financials and a two-decade experience in the field.
The IPO committee of the company had finalized the raising of Rs 127 crore by allocating 5,199,444 shares to nine anchor investors at an upper band price of Rs 245 per piece before the IPO, which it did. Information was given to the stock exchange. Anchor investors include the likes of Goldman Sachs, HDFC Trustee Company, SBI Mutual Fund, Forefront Alternative Investment Trust and Birla Sun Life Trustee Pvt Ltd.
The 2017 fiscal statistics for the company on a restated consolidated basis stated by HDFC Securities are:
- Total revenue Rs 433.7 crore
- EBITDA (adjusted for other income) Rs 70 crore
- PAT Rs 52.3 crore
- EBITDA (adjusted for other income margin) 16.39%
- PAT margin 12.07%
- Return on average capital employed 24.28%
- Return on average equity 20.78%
A ‘neutral’ rating was given for the issue by Angel Broking. Their valuations for the company and its competitor are:
- Newgen Software Technologies; P/E – 274x its 1HFY2018 annualized earnings
- Intellect Design Arena; P/E – 143x its 1HFY2018 annualized earnings
The IPO involved a fresh issue of Rs 95 crore worth shares by the company and a sale offer of equity shares totaling 13,453,932 by the current shareholders.