Did Newgen Software Experience a 29.4% Profit Decline in Q3?
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Synopsis
Newgen Software Technologies faced a significant profit decline, revealing a staggering 29.42% drop in its Q3 FY26 earnings. This financial setback led to a sharp decline in share prices, raising concerns about the company's future performance amidst challenging market conditions.
Key Takeaways
- 29.42% YoY drop in net profit for Q3 FY26.
- Shares fell nearly 16% post-announcement.
- EBIT improved to Rs 97 crore.
- Profit impacted by one-time charge of Rs 35 crore.
- Revenue from India declined to Rs 115.4 crore.
Mumbai, Jan 20 (NationPress) Newgen Software Technologies announced a staggering 29.42% year-on-year (YoY) decrease in net profit for the December quarter of the ongoing financial year (Q3 FY26). The net profit fell to Rs 62.81 crore in Q3, down from Rs 89 crore in the same quarter last year (Q3 FY25), as indicated in its stock exchange filing.
On a quarter-on-quarter (QoQ) basis, the New Delhi-based IT corporation recorded a 23.3% dip in net profit compared to Rs 81.74 crore in the preceding quarter (Q2 FY26).
The revenue from operations remained nearly stagnant, experiencing a minor decline of 0.2% to Rs 400.27 crore from Rs 400.79 crore on a QoQ basis, according to its regulatory filing.
Despite the profit fall, the operating performance showed signs of improvement. EBIT increased by 3.1% to Rs 97 crore, up from Rs 93.3 crore in the September quarter.
Consequently, the EBIT margin improved to 24.2% from 23.3% sequentially.
Newgen Software Technologies indicated that its profitability was adversely affected by a one-time charge of approximately Rs 35 crore due to the implementation of the new labor code.
The company stated that excluding this one-time effect, its net profit would have been higher on a QoQ basis.
From a business perspective, the India segment saw a revenue decline, falling to Rs 115.4 crore from Rs 117.8 crore in the prior quarter.
Revenue from the EMEA region remained stable at Rs 123.6 crore. The APAC sector reported a modest rise, with revenue increasing to Rs 65.32 crore from Rs 63.45 crore.
The US market also recorded slight growth, with revenue climbing to Rs 96 crore from Rs 95 crore in the September quarter, as per its regulatory filing.
In the wake of this announcement, Newgen Software's stock plummeted by nearly 16%, reaching an intra-day low of Rs 617.55 on the NSE.
As of around 2:31 p.m., shares were trading approximately 15.5% lower at Rs 621.85 each. Over the past year, the share price of Newgen Software has seen a decline of almost 57%.
Point of View
It's crucial to observe that Newgen Software's recent profit decline reflects broader economic trends impacting the technology sector. While the drop is concerning, the company's efforts to improve operational metrics like EBIT show resilience in a challenging market. Stakeholders should remain alert and informed about upcoming strategic moves.
NationPress
21/01/2026
Frequently Asked Questions
What caused Newgen Software's profit decline?
The profit decline was primarily due to a one-time charge of approximately Rs 35 crore related to the implementation of a new labor code.
How has Newgen Software's share price reacted to the announcement?
Following the profit announcement, Newgen Software's shares dropped nearly 16% to an intra-day low of Rs 617.55.
What are the implications of the EBIT improvements?
The increase in EBIT indicates that while net profit has declined, operational performance is improving, which could be a positive sign for future profitability.
What was the revenue trend in different regions for Newgen Software?
Revenue from India declined, while EMEA remained flat. APAC showed slight growth, and the US business also recorded a small increase.
