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S o f t q u a r t e r …
NIIT Ltd reported Q1FY12 net revenues of | 321.1crore (I-direct estimate:
| 292.2 crore) and EBITDA of | 30.7 crore on 9.6% EBITDA margin. Net
income of | 13.1 crore was lower compared to our | 21.3 crore estimate
led by lower EBITDA margin. The company expects the individual
learning (ILS), corporate learning (CLS) and school learning businesses to
grow 18% each and 25%, respectively. Note, ILS business growth
includes ‘new business’ segment as it has been clubbed with ILS
business. However execution remains a challenge & operational
performance continues to be tepid. Consequently, we are modestly
adjusting our FY12E estimates; introducing FY13E estimates and
changing our rating from BUY to HOLD.
Operating highlights
Revenues from the ILS business grew 15.6% YoY, CLS grew a
modest 4.6% YoY and SLS grew 20% YoY. NIIT reported an EBITDA
margin of 9.6% (our estimate: 11.7%), a decline of 295 bps QoQ.
Reported net income of | 13.1 crore was also below our | 21.3 crore
estimate led by lower EBITDA and higher depreciation.
Order backlog summary
CLS new order intake was tepid at US$25 million, down 25% QoQ
and 36.3% YoY. This takes the CLS pending order book executable
over the next 12 months to $87 million. For the SLS business, the
new order intake was | 97.6 crore taking the total order backlog
executable over the 12 month period to | 497.5 crore.
V a l u a t i o n
Though there seems to be traction on hiring from domestic IT and
banking sectors, NIIT’s core operational performance continues to be
tepid. We expect revenues, EBITDA & earnings to grow at a modest 8.5%,
9.6% and 9.6% CAGR during FY10-FY13E, respectively. We continue to
value NIIT on an SOTP basis with an overall EV/EBITDA target multiple of
5.5x (5.6x earlier) our FY12E EBITDA i.e. at a target price of | 61 (| 66). We
have changed our rating from BUY to HOLD as we believe execution
remains a challenge & operational performance continues to be tepid.
Visit http://indiaer.blogspot.com/ for complete details �� ��
S o f t q u a r t e r …
NIIT Ltd reported Q1FY12 net revenues of | 321.1crore (I-direct estimate:
| 292.2 crore) and EBITDA of | 30.7 crore on 9.6% EBITDA margin. Net
income of | 13.1 crore was lower compared to our | 21.3 crore estimate
led by lower EBITDA margin. The company expects the individual
learning (ILS), corporate learning (CLS) and school learning businesses to
grow 18% each and 25%, respectively. Note, ILS business growth
includes ‘new business’ segment as it has been clubbed with ILS
business. However execution remains a challenge & operational
performance continues to be tepid. Consequently, we are modestly
adjusting our FY12E estimates; introducing FY13E estimates and
changing our rating from BUY to HOLD.
Operating highlights
Revenues from the ILS business grew 15.6% YoY, CLS grew a
modest 4.6% YoY and SLS grew 20% YoY. NIIT reported an EBITDA
margin of 9.6% (our estimate: 11.7%), a decline of 295 bps QoQ.
Reported net income of | 13.1 crore was also below our | 21.3 crore
estimate led by lower EBITDA and higher depreciation.
Order backlog summary
CLS new order intake was tepid at US$25 million, down 25% QoQ
and 36.3% YoY. This takes the CLS pending order book executable
over the next 12 months to $87 million. For the SLS business, the
new order intake was | 97.6 crore taking the total order backlog
executable over the 12 month period to | 497.5 crore.
V a l u a t i o n
Though there seems to be traction on hiring from domestic IT and
banking sectors, NIIT’s core operational performance continues to be
tepid. We expect revenues, EBITDA & earnings to grow at a modest 8.5%,
9.6% and 9.6% CAGR during FY10-FY13E, respectively. We continue to
value NIIT on an SOTP basis with an overall EV/EBITDA target multiple of
5.5x (5.6x earlier) our FY12E EBITDA i.e. at a target price of | 61 (| 66). We
have changed our rating from BUY to HOLD as we believe execution
remains a challenge & operational performance continues to be tepid.
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