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Snapshot NIIT Technologies (NIIT Tech) is a leading IT solutions organization, servicing customers in North America, Europe, Asia, Japan and Australia. Investment Rationale Robust order book: NIIT Technologies has registered an order inflow to the tune of USD361 million during 9MFY’12 compared to USD150 million during the corresponding period last year, an increase of 141 per cent y-o-y. The present order book of USD245 million provides strong revenue visibility to the company.
High focus on non-linear revenues: The strategy of the company to transform itself from a generic service provider to a specialized domain-focused player, with an increasing component of non-linear revenues has paid off well. Management’s guidance is to increase the weightage of non-linear revenues to 30 per cent (from the present level of 25 per cent) should augur well for the company, going forward.
Well-diversified business model: The company’s business model is well-diversified not only in terms of geography but also in terms of verticals. The slowdown in the BFSI segment is more than compensated by higher contribution from the travel, transportation and logistics segment.
Decent dividend yield and superior ratios: NIIT Technologies has an excellent dividend-payment track record and RoE in excess of 25 per cent and we expect this trend to continue in future also. We expect the company to distribute a dividend of Rs.8 per share for this financial year.
Valuation & Recommendation We expect NIIT Technologies to post a net profit of Rs.210.5 crore on net sales of Rs.1566 crore in FY’12E. On the back of robust order inflows leading to strong earnings visibility, we expect the company to post net sales of Rs.1930.3 crore and PAT of Rs.227.6 crore in FY’13E, translating into an EPS of Rs.37.9. The net cash and cash equivalent is expected to be around Rs.300 crore, equivalent to Rs.50 per share. We value the company at 10x FY’13E earnings (along with the cash) to arrive at a price target of Rs.379 over the next 12 to 15 months ( upside of 40%).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Snapshot NIIT Technologies (NIIT Tech) is a leading IT solutions organization, servicing customers in North America, Europe, Asia, Japan and Australia. Investment Rationale Robust order book: NIIT Technologies has registered an order inflow to the tune of USD361 million during 9MFY’12 compared to USD150 million during the corresponding period last year, an increase of 141 per cent y-o-y. The present order book of USD245 million provides strong revenue visibility to the company.
High focus on non-linear revenues: The strategy of the company to transform itself from a generic service provider to a specialized domain-focused player, with an increasing component of non-linear revenues has paid off well. Management’s guidance is to increase the weightage of non-linear revenues to 30 per cent (from the present level of 25 per cent) should augur well for the company, going forward.
Well-diversified business model: The company’s business model is well-diversified not only in terms of geography but also in terms of verticals. The slowdown in the BFSI segment is more than compensated by higher contribution from the travel, transportation and logistics segment.
Decent dividend yield and superior ratios: NIIT Technologies has an excellent dividend-payment track record and RoE in excess of 25 per cent and we expect this trend to continue in future also. We expect the company to distribute a dividend of Rs.8 per share for this financial year.
Valuation & Recommendation We expect NIIT Technologies to post a net profit of Rs.210.5 crore on net sales of Rs.1566 crore in FY’12E. On the back of robust order inflows leading to strong earnings visibility, we expect the company to post net sales of Rs.1930.3 crore and PAT of Rs.227.6 crore in FY’13E, translating into an EPS of Rs.37.9. The net cash and cash equivalent is expected to be around Rs.300 crore, equivalent to Rs.50 per share. We value the company at 10x FY’13E earnings (along with the cash) to arrive at a price target of Rs.379 over the next 12 to 15 months ( upside of 40%).
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