Buy NIIT Technologies - PINC Visit Note

We visited NIIT Technologies at its Delhi campus to understand the sustainability of high growth in IT services. The management is confident that the US and APAC will continue to lead the demand growth.

* Strong volume growth, scope for pricing improvement
* EBIDTA margin to dip slightly in FY11 due to hardware component, improvement expected in FY12
* US and APAC to lead growth, Europe to be muted
* Non-linear initiatives support the growth, discretionary spend improves

We revise our topline estimates on the back of bought-out component of Rs1200mn in FY11. We expect the margins to dip by 300bps in FY11 and improve in FY12. We raise our estimates and maintain 'BUY' recommendation with a target price of Rs252.

Source : Equity Bulls

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