Result Update: NIIT Ltd - ACCUMULATE - TP Rs.110 - Kotak

NIIT Ltd moved to Ind AS from this quarter due to which numbers are not strictly in line with the numbers reported earlier as per IndGAAP. On the restated numbers as per Ind AS revenues declined by about 1% sequentially and was flat on YoY basis. Revenue from focus area grew by 10% YoY. EBITDA margins came below our estimates at 7.8% down 100bps YoY. Margins within CLS business improved marginally to 15% despite transition cost whereas SNC margins had a sharp decline of 100bps YoY due to appreciation of rupee (25% of SNC revenue comes from China and EMEA). New programs like DigiNxt and StackRoute are tracking ahead of expectations. 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. Also, company reduced its net debt substantially to Rs.402mn down by Rs.902mn YoY. 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.8.9 and our DCF-based PT stands revised to Rs.110 (Rs.102 earlier), based on FY19 earnings. We downgrade to ACCUMULATE due to recent run up in stock price.

Shares of NIIT LTD. was last trading in BSE at Rs.90.25 as compared to the previous close of Rs. 94.05. The total number of shares traded during the day was 104803 in over 815 trades.

The stock hit an intraday high of Rs. 95.4 and intraday low of 89.15. The net turnover during the day was Rs. 9592547.

Source : Equity Bulls

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