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S t a b l e q u a r t e r b u t u n c e r t a i n t y p e r s i s t s …
NIIT Tech reported numbers, which were ahead of our estimates.
Reported revenues grew 16.6% QoQ and 44% YoY to | 433 crore vs. our
| 412.9 crore estimate (11.3% QoQ growth estimate). Revenue growth
was aided by Proyecta and Morris, which contributed | 24.3 crore and |
15.1 crore, respectively while currency had a positive impact of 8.9%. The
12-month executable order book increased to $245 million from $232
million at the end of Q2FY12. Despite reporting better-than-expected
numbers, the management alluded to weakness in banking finance &
insurance (BFI) clients spending led by either vendor rationalisation,
impact of natural calamities on insurers or uncertainty in Europe. This
was the rationale for our HOLD rating and continues to be so.
ƒ Result analysis
Reported revenues grew 16.6% QoQ to | 433 crore compared to our
| 412.9 crore estimate. EBITDA margins increased 319 bps QoQ led
by rupee depreciation (up 183 bps) and absence of one-time cost of
| 11.9 crore booked in Q2. Reported PAT of | 64 crore was also
above our | 47.8 crore estimate aided by other income of | 17.4
crore, higher relative to our estimate.
ƒ Vertical revenue growth trends
Geographically, the US grew 16.7% QoQ vs. 12.9% QoQ growth in
Q2 while Europe grew 19.8% QoQ vs. 15.9% QoQ in Q2. APAC and
India grew 16.7% and 7%, respectively. BFI contribution declined 3
percentage points (pp) in Q3 and grew 7.7% QoQ. Noticeably, fiscal
year-to-date BFI contribution is down 6 pps from 42% in Q1.
Transportation contribution increased 2 pps to 38% and grew 23.2%
QoQ. Together, BFI & transportation account for 74% of revenues.
V a l u a t i o n
We are raising our estimates and expect revenues/EPS to grow at
30.7%/12.9% YoY in FY12E and 23.6%/7.09% YoY in FY13E, respectively.
This translates to 29.6%/20% CAGR growth in revenue/EPS during FY10-
FY13E. We have valued NIIT Tech at 5.4x (4.9x earlier) our FY13E EPS
estimate of | 37.2 to arrive at our target price of | 200 (| 170 earlier).
However we maintain our HOLD rating.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� �
S t a b l e q u a r t e r b u t u n c e r t a i n t y p e r s i s t s …
NIIT Tech reported numbers, which were ahead of our estimates.
Reported revenues grew 16.6% QoQ and 44% YoY to | 433 crore vs. our
| 412.9 crore estimate (11.3% QoQ growth estimate). Revenue growth
was aided by Proyecta and Morris, which contributed | 24.3 crore and |
15.1 crore, respectively while currency had a positive impact of 8.9%. The
12-month executable order book increased to $245 million from $232
million at the end of Q2FY12. Despite reporting better-than-expected
numbers, the management alluded to weakness in banking finance &
insurance (BFI) clients spending led by either vendor rationalisation,
impact of natural calamities on insurers or uncertainty in Europe. This
was the rationale for our HOLD rating and continues to be so.
ƒ Result analysis
Reported revenues grew 16.6% QoQ to | 433 crore compared to our
| 412.9 crore estimate. EBITDA margins increased 319 bps QoQ led
by rupee depreciation (up 183 bps) and absence of one-time cost of
| 11.9 crore booked in Q2. Reported PAT of | 64 crore was also
above our | 47.8 crore estimate aided by other income of | 17.4
crore, higher relative to our estimate.
ƒ Vertical revenue growth trends
Geographically, the US grew 16.7% QoQ vs. 12.9% QoQ growth in
Q2 while Europe grew 19.8% QoQ vs. 15.9% QoQ in Q2. APAC and
India grew 16.7% and 7%, respectively. BFI contribution declined 3
percentage points (pp) in Q3 and grew 7.7% QoQ. Noticeably, fiscal
year-to-date BFI contribution is down 6 pps from 42% in Q1.
Transportation contribution increased 2 pps to 38% and grew 23.2%
QoQ. Together, BFI & transportation account for 74% of revenues.
V a l u a t i o n
We are raising our estimates and expect revenues/EPS to grow at
30.7%/12.9% YoY in FY12E and 23.6%/7.09% YoY in FY13E, respectively.
This translates to 29.6%/20% CAGR growth in revenue/EPS during FY10-
FY13E. We have valued NIIT Tech at 5.4x (4.9x earlier) our FY13E EPS
estimate of | 37.2 to arrive at our target price of | 200 (| 170 earlier).
However we maintain our HOLD rating.
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