Rapidly expanding NIIT leads rally in sector

Shailesh Menon

Mumbai, Oct 3

Investing in blue-chip IT companies is passé. A new vista has opened up for investment in the IT sector: stocks of companies engaged in computer education and training.

"Stocks of mainstream software companies have stabilised, making them passive to instant triggers and market volatility. They have become `slow movers' and `non-performers'. But IT companies engaged in education and training have not realised their potential. This is the next sector to watch out," said a stock dealer.

Leading the charge is software training and service provider NIIT.

"The company has ventured into new growth areas in the rapidly emerging services sector. We recently acquired Element K," said Mr P. Rajendran, COO of NIIT.

The company has also set up NIIT Imperia to enter the management education stream.

The Institute of Finance, Banking and Insurance (IFBI), in association with ICICI Bank, will cater to the needs of the exponentially growing financial services sector in India, he added.

NIIT plans to invest Rs 20 crore each in `NIIT Imperia' and IFBI in the next three years.

Shares of NIIT traded low at Rs 326.70, down 1.09 per cent, on the BSE on Tuesday.

Another biggie in the sector is Educomp Solutions, engaged in computer-aided learning (`Smart Class' modules) and providing digital content for school curricula.

Currently, the company operates in around 2,000 Government and private schools.

"We are looking at the next level of growth. We recently launched `Mathguru', an online learning initiative for students. We are looking at a registration of around 2,500 students in the first phase. We are also planning to roll out other online tutoring facilities," said Mr Shantanu Prakash, Managing Director of Educomp Solutions.

Educomp expects turnover to touch Rs 95 crore this year, compared to from Rs 53 crore last year.

Educomp shares traded at Rs 713.70, down five per cent, on the BSE today. The scrip has gained 38.74 per cent month-on-month.

Stocks of other IT education and training companies such as Aptech Ltd and Jetking Infotran are also faring well on the bourses.

Shares of Aptech traded low at Rs 130.9, down 0.57 per cent, today while logging a 10.32 per cent rise in share prices month-on-month.

Jetking Infotran ended the day at Rs 197.80, up 1.88 per cent, on the BSE today. It has gained 21.46 per cent month-on-month.

"The need for more IT-trained personnel, Government programmes like `Wire rural India' and overseas expansion will keep these companies going for some time to come. Now is the time to enter these stocks," said an analyst.

(This article was published in the Business Line print edition dated October 4, 2006)
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