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What’s the theme?
NIIT Tech has large exposure to high-growth niche verticals such as insurance and travel. New service
lines would boost non-linear growth and lead to improvement in realizations. NIIT Tech has no exposure to
the PIIGS zone and it has been able to achieve volume growth in Europe despite economic headwinds.
Further, it has a differentiated strategy with new development of IPs in emerging technologies (cloud
services) and emerging verticals (healthcare).
What will move the stock?
1) Good performance in the BFSI and travel and transport verticals, which contribute ~74% to revenue;
2) Large untapped opportunity in the APAC markets that are expected to be highest IT spenders in CY11;
3) Strong order book and high bookings in Q4FY11 (USD116mn compared with USD50mn in Q3FY11 and
USD150mn in 9MFY11); 4) New order win announcements with recent JV with Morris Communication
(aggregate deal amount of USD85mn over 5 years); 5) Highest EBITDA margins among mid-tier peers in
the IT services business.
Where are we stacked versus consensus?
Our top-line estimates for FY12 and FY13 is in line with consensus, underpinned by stronger volumes
and modest uptick in pricing. Our EBITDA margin estimate for FY12 is 20.4% and for FY13 is 20.3%, in
line with consensus. Our EPS estimate for FY12 is 1.2% and for FY13 is 5.8% higher than consensus.
What will challenge our target price?
1) Slower recovery in Europe; 2) Sharp currency volatility; 3)
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
What’s the theme?
NIIT Tech has large exposure to high-growth niche verticals such as insurance and travel. New service
lines would boost non-linear growth and lead to improvement in realizations. NIIT Tech has no exposure to
the PIIGS zone and it has been able to achieve volume growth in Europe despite economic headwinds.
Further, it has a differentiated strategy with new development of IPs in emerging technologies (cloud
services) and emerging verticals (healthcare).
What will move the stock?
1) Good performance in the BFSI and travel and transport verticals, which contribute ~74% to revenue;
2) Large untapped opportunity in the APAC markets that are expected to be highest IT spenders in CY11;
3) Strong order book and high bookings in Q4FY11 (USD116mn compared with USD50mn in Q3FY11 and
USD150mn in 9MFY11); 4) New order win announcements with recent JV with Morris Communication
(aggregate deal amount of USD85mn over 5 years); 5) Highest EBITDA margins among mid-tier peers in
the IT services business.
Where are we stacked versus consensus?
Our top-line estimates for FY12 and FY13 is in line with consensus, underpinned by stronger volumes
and modest uptick in pricing. Our EBITDA margin estimate for FY12 is 20.4% and for FY13 is 20.3%, in
line with consensus. Our EPS estimate for FY12 is 1.2% and for FY13 is 5.8% higher than consensus.
What will challenge our target price?
1) Slower recovery in Europe; 2) Sharp currency volatility; 3)
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