Earnings Update - NIIT Technologies(NTL IN) - Healthy order book - CSEC Research

Healthy order book

- In 4QFY17, NIIT Technologies reported robust growth. Consolidated revenue grew to INR 7,447mn (7.3% QoQ & +8.8% YoY) owing to robust growth in GIS business. Dollar revenue increased 7.4% QoQ to USD 110.3mn. During the quarter, the company recorded one-time payment against settlement of a government contract, which was put on hold resulting in revenue recognition of INR 271mn for services contract. Barring one time settlement, revenues grew 3.4% QoQ.

- EBITDA margins rose 370 bps QoQ to 20.5%. Margin expansion was primarily on account of a better-than-expected performance on the revenue front and supported by a decline in SG&A expenses (-2.8% QoQ). PAT grew by 60.7% to INR 1,003mn.

Valuation: Management believes that FY18 to perform well as compared to FY17 and has given a robust outlook even in seasonally weak 1QFY17. Order book addition of ~USD100mn for consecutive six quarters along-with 12-months executable order book of ~USD 320mn has shown confidence on growth front. Exit from government business and material improvement in debtors day to 64 has led to strong cash generation. At CMP, the stock is currently trading at 11.6/10.4x of 18E/FY19E EPS. We assign an OUTPERFORMER rating on the stock with revised target price of INR 556, valuing the stock at 11X FY19E EPS and.

Risks: Challenging macroeconomic situation, a slowdown in IT spending and adverse cross currency movements.

Shares of NIIT TECHNOLOGIES LTD. was last trading in BSE at Rs.498.6 as compared to the previous close of Rs. 513.05. The total number of shares traded during the day was 20596 in over 1239 trades.

The stock hit an intraday high of Rs. 520.8 and intraday low of 493.4. The net turnover during the day was Rs. 10372153.

Source : Equity Bulls

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