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NIIT reported its 2QFY2011 numbers, which were better than our expectations. Revenue
came in at `345.8cr (v/s our estimate of `345.8cr), a 4% yoy decline. The drop was
primarily because of one-time Gujarat government’s order of `56cr, which got executed at
the same time last year, resulting in a higher base effect. On a like-to-like basis, the
company’s growth was strong at 14% yoy on the back of strong growth of 12% and 10.6%
yoy in its anchor businesses—individual learning solution (ILS) and corporate learning
solution (CLS). The operational performance was good with EBITDA at `53.2cr (v/s our
expectation of `52.3cr) and margins expanding by 163bp yoy to 15.4%. PAT stood at
`28.5cr with 9% yoy growth. The company is foreseeing quality enrollment growth in its ILS
business and a strong qualitative pipeline for its CLS business. Also, the company is
gaining traction for its solutions from private schools. The stock is currently under review.
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