Accumulate NIIT Technologies - 1QFY2013 Result Update - Kotak

NIITT's results for 1QFY13 were better than our estimates, largely due to currency fluctuations. The company reported and in-line volume growth of 0.5% (excluding hardware revenues), which was impacted by softness in the BFS vertical. The insurance vertical has seen improvement in June though and should report better growth in 2QFY13. T&T vertical remains strong.

The company has not seen any major competition from larger peers and the realisations are largely stable. Margins fell on a QoQ basis despite the rupee depreciation, due to the salary increments. Morris revenues have started bringing in margins. The order bookings were at an encouraging $82mn ($92mn in 4QFY12). Orders executable over 12 months are 20% higher v/s the previous year.

On the macro front, the management has indicated continued challenges, but expects the order book to help sustain decent revenue growth. The company is chasing a few large deals worth more than $25mn each. We have tweaked our FY13E estimates. Our FY13E EPS stands at Rs.38.6 (Rs.38.4 earlier). Our DCF - based price target stands at Rs.314 (Rs.312 earlier), based on FY13 earnings. The stock has outperformed the sector in recent past and we recommend using any weakness to ACCUMULATE the stock. NIITT has been achieving consisting revenue growth and margins over the past few quarters.

Source : Equity Bulls

Keywords