Result Update: NIIT Technologies Ltd - ACCUMULATE - TP Rs.550 - Kotak

NIITT revenue grew by 3.2% QoQ in USD terms to USD 109.9mn and was marginally below our estimates of USD 111mn.EBIDTA margins at 15.6% was down by about 190bp sequentially due to wage hike, visa cost, INR appreciation and seasonality in GIS. Net income at Rs.513mn was below our estimates due to tax on dividend income from foreign subsidiaries. Company continues to report strong order intake of USD 100mn+, 12-month executable book was up by 4.2% YoY. BFSI and Manufacturing reported healthy growth while transportation declined sequentially. Despite continued softness expected from T&T vertical in Q2, company expects growth in Q2 to be better than Q1. Management expects margins to improve and has guided for an exit rate of ~18% led by improvement in GIS for the remainder year. Digital revenues increased to 21% of revenue during the quarter. Our FY18 & FY19 earnings stand at Rs.41.75 & Rs.48.9 per share respectively. At 11.1x FY19E EPS valuation are relatively inexpensive (with cash accounting for 25% of market cap), however we maintain ACCUMULATE with a target price of Rs.550 (Rs.518 earlier).

Shares of NIIT TECHNOLOGIES LTD. was last trading in BSE at Rs.535.8 as compared to the previous close of Rs. 542.6. The total number of shares traded during the day was 19032 in over 900 trades.

The stock hit an intraday high of Rs. 544.85 and intraday low of 530.2. The net turnover during the day was Rs. 10237132.

Source : Equity Bulls

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