As someone who has collaborated with them in the past, I’ll demystify some of the hype around their business.
They make document management platform where you basically manage documents in digital format. It’s a highly competitive space and which reflects in Newgen’s modest margins for a product business.
As for their patents, one shouldn’t read too much into them. I have been working in the technology sector for last twenty years and can tell you that majority of the patents tend to be flimsy and used for marketing purposes.
On a big picture level, their business will do well as world is going paperless and advantage with small IT companies is the small base. So even if they don’t gain any market share, increasing segment pie will ensure the steady growth in their topline. But one should keep an eye on valuations. For 25% margins, and a commoditized product business, 70+ P/E is a bit stretched.
Disc- Identified this stock as a value buy when it was 300 in 2022 and invested.
| Subscribe To Our Free Newsletter |
