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NIIT Technologies
NIIT Technologies Ltd (NTL), a mid-sized IT services company, has built strong domain expertise in niche
industry verticals like insurance, travel, manufacturing & retail. With the recent surveys/channel checks
showing signs of a revival in IT spending and the demand environment getting more broad based, the IT
spending in these lagging sectors is likely to catch up in 2011. Moreover, the company has the advantage of a
well-balanced geographical mix of revenues from North America, Europe and the Asia-Pacific.
NTL is one of the few mid-cap Indian IT services vendors that have over the years built up a strong non-linear
revenue platform through organic and inorganic initiatives. Currently, NTL derives around 27% of its total
revenues from its non-linear initiatives like managed services and IP asset-based services rather than
commoditisable time & material (T&M) kind of pricing model. NTL’s non-linear initiatives would turn out to be
a game changer for the company in the coming years.
With its strong domain expertise in a few niche verticals and competitive advantage in terms of significant
contribution from its non-linear initiatives, NTL is well placed to benefit from the overall improvement in the
demand environment. Consequently, we expect the company to show a steady growth of 18% CAGR in its net
profit over FY10-13. Moreover, the company has healthy cash on the books with minimal debt. This leaves
scope for further acceleration in growth through inorganic initiatives and shall act as another re-rating
trigger for the stock. We have Buy on NTL with a 12-month price target of Rs285 (8x FY13 earnings)
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
NIIT Technologies
NIIT Technologies Ltd (NTL), a mid-sized IT services company, has built strong domain expertise in niche
industry verticals like insurance, travel, manufacturing & retail. With the recent surveys/channel checks
showing signs of a revival in IT spending and the demand environment getting more broad based, the IT
spending in these lagging sectors is likely to catch up in 2011. Moreover, the company has the advantage of a
well-balanced geographical mix of revenues from North America, Europe and the Asia-Pacific.
NTL is one of the few mid-cap Indian IT services vendors that have over the years built up a strong non-linear
revenue platform through organic and inorganic initiatives. Currently, NTL derives around 27% of its total
revenues from its non-linear initiatives like managed services and IP asset-based services rather than
commoditisable time & material (T&M) kind of pricing model. NTL’s non-linear initiatives would turn out to be
a game changer for the company in the coming years.
With its strong domain expertise in a few niche verticals and competitive advantage in terms of significant
contribution from its non-linear initiatives, NTL is well placed to benefit from the overall improvement in the
demand environment. Consequently, we expect the company to show a steady growth of 18% CAGR in its net
profit over FY10-13. Moreover, the company has healthy cash on the books with minimal debt. This leaves
scope for further acceleration in growth through inorganic initiatives and shall act as another re-rating
trigger for the stock. We have Buy on NTL with a 12-month price target of Rs285 (8x FY13 earnings)
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