Newgen Software Targets 23-25% Margins as Profit Beats, Stock Slips

Newgen Software Technologies grew profit 26% year over year in the quarter ended June 30, yet its stock fell nearly 3% the day results came out. The New Delhi enterprise software maker is guiding to 23% to 25% operating margins for fiscal 2027, banking on AI-driven engineering cuts and a promised rebound in delayed projects.

That recovery bet now belongs to Tarun Nandwani, who takes over as chief executive on August 1, two weeks after a quarter in which revenue and profit both fell sharply from the prior three months.

Profit Rises 26% as Revenue Grows 11%

Newgen Software Technologies, the enterprise software company behind the low-code NewgenONE platform, reported consolidated revenue from operations of ₹357 crore for the quarter ended June 30, 2026, up 11.2% from ₹321 crore a year earlier.

Profit after tax climbed 26% year over year to about ₹63 crore (₹62.8 crore precisely), giving the company a consolidated profit margin of 17.6%. Diwakar Nigam, Newgen’s chairman and managing director, said the quarter reflected “resilient execution, with revenue up 11% YoY.”

Shares still closed lower. Newgen ended July 16 at ₹541 on the National Stock Exchange, down ₹16.70, or nearly 3%, from the previous close of ₹557.70, as investors weighed slower implementation revenue and payment delays in Europe, the Middle East and Africa against the profit beat. The company’s total market capitalization stood at ₹7,746.13 crore that day.

Newgen’s own account of the quarter shows annuity streams making up 71% of total revenue, spanning support contracts, cloud subscriptions and software licensing.

Revenue Fell 21% From the Prior Quarter

Measured against the quarter before it, the numbers move the other way. Revenue dropped more than a fifth, and profit fell even further.

• Revenue slid to ₹357 crore from ₹453 crore in the March quarter, a 21.2% sequential drop.
• Net profit fell 40.9% sequentially, to ₹62.8 crore from ₹106 crore.
• Operating margin, measured as EBIT, or earnings before interest and tax, contracted 1,840 basis points in three months, to 13.1% from 31.5%.

Management flagged this coming. On the earnings call, the company said full-year EBITDA, short for earnings before interest, tax, depreciation and amortization, margins should still reach 23% to 25%, with the first quarter marked as the weakest of the fiscal year.

Part of the year-over-year comparison also flatters Newgen. Fiscal 2026 revenue grew just 6%, a slow year in which large licensing deals in India and the Middle East slipped behind schedule.

Can Newgen Close the Implementation Gap by September?

Newgen expects delayed implementation projects, particularly in Europe, the Middle East and Africa, to convert into revenue during the second and third quarters of fiscal 2027. Management has held its full-year EBITDA margin target at 23% to 25%, betting that AI-driven engineering efficiency and a recovering project pipeline offset the first quarter’s soft start.

The company said implementation revenue was hurt by slow project starts, and that those delayed projects have now begun. One trading note circulating after the results pegged the shortfall at about ₹12 crore, though Newgen has not disclosed a specific rupee figure of its own.

The same AI efficiency push that Newgen credits for lifting its EBITDA margin is unsettling other corners of Indian IT services, where an AI overhaul at a major US client has rattled outsourcing vendors. Newgen frames the same technology as a cost lever rather than a threat, since its licensing model is not billed by the hour.

The margin expansion is a function of optimization of the AI practices in our engineering that we have incorporated.

Tarun Nandwani, Newgen’s chief operating officer and incoming chief executive, told analysts on the earnings call.

A New CEO Takes Over in Two Weeks

Virender Jeet, Newgen’s chief executive since 2021 and an employee of the company since 1992, resigned last month citing personal and professional reasons. His last working day is August 31, 2026.

Succeeding him is Nandwani, currently chief operating officer, who becomes CEO on August 1 for an 18-month term ending January 31, 2028. He has spent 33 years at Newgen, helping build its trade finance and loan management business lines.

• Tarun Nandwani moves from chief operating officer to chief executive officer, effective August 1, 2026.
• Pramod Kumar, previously vice president of sales for Newgen’s Singapore subsidiary, becomes the company’s first chief growth officer.
• T.S. Varadarajan, Newgen’s co-founder, is now vice chairman while continuing as a whole-time director.

Newgen’s own statement on the leadership changes credits Kumar with growing Asia-Pacific revenue from ₹73 crore to ₹237 crore over five years, a compound annual growth rate of nearly 27%.

SaaS and Overseas Deals Carry the Growth

Subscription revenue, the broader category covering software-as-a-service and license subscriptions together, reached ₹146 crore, up 21% year over year. The pure SaaS slice within it grew faster, up 40% to ₹60 crore, as customers keep shifting off one-time licenses and onto cloud contracts.

New business abroad added to the total. Newgen signed a core insurance platform transformation deal in Kuwait worth KWD 875,000, about ₹26.7 crore, a retail loan origination deployment in the Philippines worth USD 1.71 million, about ₹16.2 crore, and a content management engagement with a UK enterprise worth GBP 1.13 million, about ₹14.5 crore. The company added 10 new enterprise customers during the quarter and picked up three separate mentions in Forrester’s Q2 2026 software landscape reports.

Newgen is not the only Indian software name leaning on artificial intelligence this earnings season. Tata Consultancy Services, the country’s largest IT services exporter, reported its own quarter this week, with its AI-linked revenue run rate reaching $2.6 billion, a scale Newgen’s much smaller AI practice does not yet approach.

Wall Street Can’t Agree on Where This Stock Goes

Newgen shares have fallen 35% since the start of the year, touching a 52-week low of ₹401.05 in March and sitting well below their 52-week high of ₹1,109.90 from last July. Analysts are split on whether the stock has further to fall or is already cheap.

• Alphaspread, tracking 11 analysts, puts the average 12-month target at ₹850.97 on a Buy consensus, though estimates range from ₹666.60 to ₹1,260.
• ICICI Securities held a Hold rating with a ₹530 target in a May note, arguing much of the recovery was already priced in.
• MarketsMojo downgraded the stock to Sell in May, citing mixed financials and weakening technicals even as the broader analyst consensus stayed Buy.

The spread between a ₹530 Hold and an ₹850 average Buy target is unusually wide for a mid-cap software stock, and it says as much about how differently analysts read the same implementation delays as it does about the stock itself.

The Next Scorecard Comes in October

Shareholders on record today, July 17, qualify for Newgen’s ₹6 per share final dividend, payable August 23 and 20% larger than last year’s payout.

Newgen reports second-quarter results in October. That is when Nandwani, by then several weeks into the job, will have to show the delayed implementation revenue actually came back.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Stock prices, analyst targets and financial figures are accurate as of publication and can change quickly. Readers should consult a qualified financial advisor before making investment decisions involving Newgen Software Technologies or any other security.