NIIT Technologies Ltd. (NIIT Tech) | Q3FY15 Result Update | In-line Performance; Maintain SELL with TP of Rs.326… :: IndiaNivesh

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NIIT Tech reported revenue of Rs.5,953 mn, up 1.2% Q/Q. During the Quarter, EMEA
delivered negative volume growth, partially offset by favourable volume growth in
US, APAC & India. EBITDA margin expanded 51 bps Q/Q to 14.5% (v/s INSPL est.
15.0%) on back of lower transition cost. Depreciation expenditure went down 9.1%
Q/Q to Rs.231 mn (v/s Rs.254 mn in Q2FY15). On back of increase in cash balance,
the company reported higher other income of Rs 53 mn (v/s negative Rs4 mn in
Q2FY15). During the quarter, forex gain stood at Rs9 mn (v/s Rs18 mn loss in
Q2FY15). Tax rate stood at 26.0% (v/s 27.3% in Q2FY15) in Q3FY15. Net profit went
up 20.3% Q/Q to Rs 482 mn (v/s Rs. 401 mn in Q2FY15). The company registered
fresh orders worth of $109 mn and added five new customers (2 in the US and 1
each in EMEA, APAC and India). Management expect better traction in revenue/
EBITDA during FY16E relative to FY15E.
Key Conference Call Takeaway
Flat 12M Executable Order- Book
On account of key clients ramp-down, NIIT Tech’s demonstrated -1% Q/Q (to $296
mn) growth in 12M executable order book. This reduces the overall revenue visibility
of the company. As a result, during the last quarter we reduced our FY15 revenue
and forecast low single-digit rupee revenue growth for FY15E. We continue to
maintain the same stance during the quarter and maintain our FY15E/FY16E
estimates. Management expect Q4FY15 to be better, followed by FY16E on account
of strong signs of recovery in US and significant opportunities in the emerging
markets.

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