Newgen Software Reports Strong Q2 FY26 With 11% Revenue Growth Fueled by Digital Transformation and AI

Newgen Software announced strong financial results for the second quarter of Fiscal Year 2026 (Q2 FY26). Revenue reached ₹401 crore, an 11% increase compared to the same period last year. Profit grew by 16% to ₹82 crore, reflecting improved operational efficiency and strategic investments. A key highlight was the 20% rise in subscription revenue, which amounted to ₹126 crore, indicating a successful shift towards recurring revenue models.

The company is well-positioned to capitalize on global trends such as the increasing demand for digital transformation, the widespread adoption of cloud and Software as a Service (SaaS) models, and substantial investments in Artificial Intelligence (AI) solutions. Newgen's strategy includes expanding into new geographical regions and business verticals, bolstered by a strong partner ecosystem, which supports its long-term growth potential.

During the quarter, Newgen acquired 15 new clients and secured significant multi-million dollar orders across the United Kingdom, Europe, Ghana, and India. Growth was broad-based, with the US and Asia-Pacific regions both experiencing a 22% increase, while India and the EMEA region also showed steady gains. The company maintained healthy profit margins at 20.4%, driven by enhanced efficiency from digital solutions and AI-based products. Investments in sales, marketing, and research and development (R&D) are also contributing positively.

The order book grew by over 20% year-on-year, and the company reported healthy cash flow. Newgen's focus on scaling its SaaS offerings, increasing its global footprint, and leveraging AI investments continues to drive consistent growth and strong financial performance. Analysts have reiterated a "Hold" rating for the stock, setting a Price Target (TP) of ₹1,091, based on a 36.5 times FY27E Earnings Per Share (EPS) multiple.

Impact: This strong performance and clear growth strategy signal positive momentum for Newgen Software. The company's ability to meet growing market demands, secure new clients, and expand globally suggests a positive outlook for its stock, potentially leading to increased investor confidence and market valuation. Rating: 8/10.

Heading: Difficult Terms and Their Meanings * **Q2 FY26**: Second Quarter of the Fiscal Year 2026. Fiscal year in India typically runs from April to March. So, Q2 FY26 covers July to September 2025. * **y-o-y**: Year-over-year. Compares a metric from the current period to the same period in the previous year. * **₹**: Indian Rupee, the official currency of India. * **crore**: A unit in the Indian numbering system, equal to 10 million. * **SaaS**: Software as a Service. A software distribution model where a third-party provider hosts applications and makes them available to customers over the Internet. * **AI**: Artificial Intelligence. The simulation of human intelligence processes by machines, especially computer systems. * **EMEA**: Europe, Middle East, and Africa. A geographical region. * **EPS**: Earnings Per Share. A measure of a company's profitability that indicates how much profit is allocated to each outstanding share of common stock. * **TP**: Target Price. The price at which an analyst or investor expects a stock to trade in the future. * **FY27E**: Fiscal Year 2027 Estimates. Refers to projected financial figures for the fiscal year 2027.