PE vs PEG Ratio: Which is Better for Stock Selection?
22 Oct 2025
Analysis of Newgen Software and CarTrade Tech delivering surprising Q2 FY26 results despite recent price run-ups
⚠️ Price Movement Alert
Both stocks have seen significant run-ups recently - Newgen up 11.19% and CarTrade up 17.63% on results day. Caution advised as correction may be seen after such sharp movements.
Q2 FY26 Technology & Digital Sector Overview
The Q2 FY26 earnings season has revealed some intriguing performances in the technology and digital services sector. While both Newgen Software and CarTrade Tech have delivered strong operational results, their recent price run-ups warrant cautious analysis. In this exclusive review, we decode the quarterly results of these two tech players that surprised the street with their performance despite rich valuations.
Digital Transformation Leader: Strong Fundamentals
Solid Performance
About the Company
Newgen Software Technologies Ltd is a leading provider of digital transformation platforms with a focus on low-code automation, content services, and process management. The company offers a comprehensive suite of products including business process management, enterprise content management, and customer communication management solutions. With a global presence and strong client relationships across banking, insurance, and government sectors, Newgen has established itself as a key player in the digital transformation space. The company's innovative low-code platform enables rapid application development and process automation for enterprises worldwide.
💎 Operational Excellence
The company demonstrates exceptional profitability metrics with ROCE of 28.0% and ROE of 22.5%, indicating efficient capital utilization and strong operational performance despite premium valuations.
Key Financial Metrics & Technical Parameters
Current Price
₹ 997
⇡ 11.19%
Market Cap
₹ 14,117 Cr
Stock P/E
42.9
ROCE
28.0%
ROE
22.5%
EPS
₹ 23.3
Book Value
₹ 112
Debt
₹ 51.8 Cr
| Technical Parameter | Current Value | Analysis |
|---|---|---|
| 52-Week High/Low | ₹ 1,799 / ₹ 740 | Trading closer to lower range after recent correction |
| Dividend Yield | 0.50% | Modest dividend payout |
| Debt to Equity | 0.03 | Virtually debt-free company |
| Face Value | ₹ 10.0 | Standard face value |
💡 Investment Perspective
- Premium Valuation: P/E of 42.9 reflects high growth expectations
- Strong Profitability: ROCE of 28.0% and ROE of 22.5% indicate operational excellence
- Healthy Balance Sheet: Virtually debt-free with strong cash flows
- Growth Potential: Positioned well in digital transformation space
- Recent Run-up: 11.19% gain on results day warrants caution for new entries
Auto Tech Platform: Growth Story Continues
Growth at Premium
About the Company
CarTrade Tech Ltd is one of India's leading multi-channel auto platforms with presence across vehicle transactions, financing, and other value-added services. The company operates various platforms including CarWale, CarTrade, Shriram Automall, BikeWale, and CarTradeExchange. With a comprehensive ecosystem that connects buyers and sellers of new and used cars, CarTrade has established itself as a key player in India's automotive digital space. The platform benefits from multiple revenue streams including listing fees, lead generation, auction services, and financial products, creating a diversified business model in the growing Indian automotive market.
📈 ESOP Grant Announcement
The company has announced grant of stock options under CTT ESOP 2021, indicating focus on talent retention and long-term growth alignment.
Key Financial Metrics & Technical Parameters
Current Price
₹ 3,135
⇡ 17.63%
Market Cap
₹ 14,934 Cr
Stock P/E
79.8
ROCE
7.59%
ROE
6.24%
EPS
₹ 39.4
Book Value
₹ 489
Debt
₹ 128 Cr
| Technical Parameter | Current Value | Analysis |
|---|---|---|
| 52-Week High/Low | ₹ 3,182 / ₹ 1,022 | Near all-time high levels |
| Dividend Yield | 0.00% | No dividend payout, reinvesting for growth |
| Debt to Equity | 0.06 | Minimal debt on books |
| Face Value | ₹ 10.0 | Standard face value |
🏢 Official ESOP Announcement Reference
For detailed information on ESOP grants and corporate announcements, refer to the official NSE filing:
⚠️ Key Challenges & Monitorables
- Rich Valuation: P/E of 79.8 demands exceptional growth to justify
- Moderate Profitability: ROCE of 7.59% and ROE of 6.24% below industry standards
- Recent Run-up: 17.63% single-day gain increases short-term correction risk
- Growth Expectations: Market pricing in significant future growth
- Sector Competition: Increasing competition in auto-tech space
💡 Growth Drivers & Positive Developments
- Market Leadership: Strong position in growing Indian auto market
- Platform Ecosystem: Multiple revenue streams and business segments
- Digital Transformation: Benefitting from auto industry digitalization
- Talent Retention: ESOP grants aligning employee interests with growth
- Clean Balance Sheet: Minimal debt providing financial flexibility
Comparative Analysis & Investment Outlook
Software vs Auto Tech: Performance Deep Dive
| Parameter | Newgen Software | CarTrade Tech | Analysis |
|---|---|---|---|
| Valuation (P/E) | 42.9 | 79.8 | Both premium, CarTrade significantly higher |
| Profitability (ROCE) | 28.0% | 7.59% | Newgen demonstrates superior capital efficiency |
| Return on Equity | 22.5% | 6.24% | Newgen significantly more efficient |
| Recent Price Movement | ⇡ 11.19% | ⇡ 17.63% | Both saw strong results-day gains |
| Market Cap (₹ Cr) | 14,117 | 14,934 | Similar market capitalization |
| Debt Position | Virtually debt-free | Minimal debt | Both have strong balance sheets |
Investment Perspective: Newgen Software presents a case of operational excellence with strong profitability metrics, though at premium valuations. CarTrade Tech shows growth potential in the auto-tech space but with significantly higher valuation multiples that demand exceptional future growth. Value-conscious investors might find Newgen's profitability metrics more appealing, while growth investors could be attracted to CarTrade's market position in the evolving auto digital ecosystem. However, both stocks have seen substantial run-ups, suggesting cautious entry points might be prudent.
⚠️ Sector-Wide Challenges & Opportunities
Valuation Concerns: Both companies trade at premium valuations requiring strong growth continuation
Macroeconomic Sensitivity: Technology spending and auto sales can be cyclical
Competitive Intensity: Both sectors face increasing competition and disruption
Digital Transformation Tailwinds: Both companies benefit from structural digital adoption trends
Growth Potential: India's digital transformation and auto market growth provide long-term opportunities
🏢 Official Results Reference
For detailed Q2 FY26 results and corporate announcements, refer to the official NSE filing:
Newgen Software Q2 FY26 Results - NSE Filing