Result Update: NIIT Ltd (NIIT) - BUY - TP Rs.103 - Kotak

NIIT's 4Q numbers were better than our expectations, with S&C reporting a 3% YoY rise in revenues and CLS (excluding one-off strategic sourcing revenues) bringing in a 16% YoY CC growth. While S&C has recovered from the demonetization impact, CLS growth is above the guided level of about 13% annual growth, as new projects scale up. Margins improved in S&C business while they were maintained in CLS. New programs like DigiNxt and StackRoute are tracking ahead of expectations. CLS should continue to report consistent growth, going ahead, we believe. NIIT invested Rs.32mn (Rs.24mn in 3Q) in on-line initiatives without any corresponding revenues, impacting overall profitability. We remain optimistic on the future prospects of NIIT. NIIT has launched new programs in S&C business and added new clients in CLS, which should support future growth. We await more clarity on growth prospects and the corresponding profitability in the Skills business as well as the on-line business, though. Our FY19E EPS stands at Rs.9.1 and our DCF-based PT stands revised to Rs.103 (Rs.95 earlier), based on FY19 earnings. We maintain BUY.

Shares of NIIT LTD. was last trading in BSE at Rs.87.55 as compared to the previous close of Rs. 87.6. The total number of shares traded during the day was 164636 in over 1355 trades.

The stock hit an intraday high of Rs. 89.7 and intraday low of 85.45. The net turnover during the day was Rs. 14385029.

Source : Equity Bulls

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