Newgen Software Shares Plunge 13% on Profit Hit, Flat Revenue

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AuthorKavya Nair|Published at:
Newgen Software Shares Plunge 13% on Profit Hit, Flat Revenue
Overview

Newgen Software Technologies Ltd. shares tumbled 13% following its third-quarter earnings report. Net profit fell 23.2% to ₹63 crore, impacted by a one-time ₹35 crore charge from the new labour code. Revenue remained nearly flat at ₹400 crore, showing no sequential growth. The company's India and EMEA businesses saw declines or flat performance.

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Profit Squeezed by Labour Code

The significant drag on Newgen Software's third-quarter net profit stemmed from a one-time charge associated with the new labour code. This ₹35 crore expense pulled the net profit down by 23.2% to ₹63 crore, compared to ₹82 crore in the preceding quarter. Without this exceptional item, profitability would have shown sequential improvement.

Revenue Stagnation

Meanwhile, the company's top line presented a picture of inertia. Revenue for the quarter stood at ₹400 crore, virtually unchanged from ₹401 crore reported in the July-September period. This lack of growth suggests potential headwinds in market demand or sales execution across key geographies.

Segmental Performance

Digging into regional performance, Newgen Software's India business saw a slight contraction, generating ₹115.4 crore against ₹117.8 crore previously. The EMEA region reported flat topline figures at ₹123.6 crore. A modest increase was observed in APAC revenue, edging up to ₹65.32 crore from ₹63.45 crore. The US business also registered a marginal rise, reaching ₹96 crore from ₹95 crore.

Market Reaction

The market reacted swiftly and negatively to the results. Shares of Newgen Software Technologies Ltd. plummeted by as much as 13% on Tuesday, January 20, trading at ₹639.65. This sharp decline adds to a challenging year for the stock, which has seen a 57% reduction in value over the past 12 months, reflecting investor concerns about its profitability and growth trajectory.

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Disclaimer:This content is for educational and informational purposes only and does not constitute investment, financial, or trading advice, nor a recommendation to buy or sell any securities. Readers should consult a SEBI-registered advisor before making investment decisions, as markets involve risk and past performance does not guarantee future results. The publisher and authors accept no liability for any losses. Some content may be AI-generated and may contain errors; accuracy and completeness are not guaranteed. Views expressed do not reflect the publication’s editorial stance.