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Research
NIIT - 4QFY2012 Result Update - Angel Broking
Posted On : 2012-05-12 10:39:18( TIMEZONE : IST )
For 4QFY2012, NIIT reported modest performance, which was in-line with our expectations. Revenue growth was driven by all businesses, but reported operational performance was dented due to one-time pass through revenue in SLS business. The company's net debt currently stands at Rs.6.7cr, which is a significant improvement over Rs.313cr in FY2011 due to sale of Element-K during 3QFY2012. We maintain our Buy rating on the stock.
Quarterly highlights: For 4QFY2012, NIIT reported consolidated revenue of Rs.305cr, up 22.1% yoy. This revenue includes one-time pass through revenue of Rs.48.2cr; excluding this, revenue came in at Rs.257cr. Revenue from ILS, SLS (excluding one-time pass through) and CLS (excluding Element-K) businesses increased by 14%, 2% and 36% yoy, respectively. Blended EBITDA margin of NIIT declined by 78bp yoy to 11.7% due to margin decline in ILS and SLS businesses. EBITDA margin, excluding Element-K and pass through, came in at 13.9%.
Outlook and valuation: Management indicated that the ILS and CLS businesses would be the company's primary growth drivers going ahead. In the ILS business, the company has started setting up cloud campuses in FY2012 and got 13,800 enrollments in FY2012, which is healthy and promises large and growing opportunity in this area. CLS, which was heavily impacted by the downturn, has rebounded with respect to growth and NIIT was able to bag nine deals in FY2012 from global MTS customers, with US$120mn revenue visibility over the contract period. In the SLS business, the company is witnessing traction from private schools and has added 687 schools in FY2012. Also, the company's net debt currently stands at Rs.6.7cr, which is a significant improvement over Rs.313cr in FY2011 due to sale of Element-K during 3QFY2012. Hence, we expect the company to post a PAT CAGR of 12.7% over FY2012-14E. We have valued NIIT on an SOTP basis, arriving at a target EV/EBITDA of 2.6x on FY2014E consolidated EBITDA of Rs.197cr, arriving at a target price of Rs.52. We maintain our Buy rating on the stock.