NIIT Technologies Ltd - PINC Result Update

NIIT Tech reported a robust Q1FY11 beating our and street expectations with a revenue growth of 21.8%QoQ to Rs2,914mn (including the bought out component of BSF contract worth Rs450mn).

• Strong revenue growth but margins witness pressure
• Broad based growth
• Stable client addition and sustainable growth in order book

Outlook – Strong revenues; no scope for improvement in margins

The robust volume growth in US will continue to drive revenues. Despite the challenging economic conditions in Europe, Room Solution has witnessed volume growth in this quarter. The salary hike is given in a staggered manner and will have a negative impact on the margins going forward. We believe that the broad based growth in the focus niche verticals of NIIT Tech will enable it to be well placed among peers.

We maintain our 'BUY' recommendation on NIIT Tech with a target price of Rs243.

Source : Equity Bulls

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