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Prabhudas Lilladher
NIIT Technologies (Buy)
CMP: ₹389.45
Target: ₹440
NIIT Tech reported a revenue growth of 1.4 per cent q-o-q to $96.5 million (PL estimate: $99.4 million, Cons.: $97.7 million) and declined by 1.9 per cent q-o-q to ₹577.6 crore (PLe: ₹594.2 crore, Cons: ₹583.9 crore). EBITDA margins eroded by 171 bps to 13.4 per cent (PLe: 14.5 per cent , Cons.: 14.5 per cent ), due to rupee appreciation, wage hike and ramp-down. EPS declined by 30.2 per cent q-o-q to ₹7.11 (PLe: ₹8.3, Cons.: ₹8.5). Fresh Order intake for NIIT Tech was $144 million (five-year average: $105 million) driven by three wins in the US and one in Europe, West Asia and Africa. However, it declined by 14 per cent y-o-y. The order executable over the next 12 months grew by 12.2 per cent y-o-y to $295 million. We revise our revenue and margin expectations downwards for FY15E and FY16E as we see slower revenue momentum for the company. We expect muted growth at the bottom line as newly-signed MSP/IMS deals involve upfront cost and weaker margin profile.
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