NIIT Ltd - Result Update - ACCUMULATE - TP Rs.113 - Kotak

NIIT Ltd 2QFY18 results came below our expectation largely due to sharp de growth in SLG and S&C segment of 49% and 21% YoY respectively. CLG reported growth of 10% YoY (14% YoY in CC Terms) in line with our expectation. SLG segment degrew mainly on account of planned ramp down of government business and lower than expected revenue from IP led business which contributes 73% of SLG revenue. S&C de growth was predominantly due to changes in spending pattern of Indian banking sector, though management remains confident of pikup in revenue from 3Q onwards. EBITDA margins too were below our estimates at 8.5% down 40bps YoY Margins within CLG business improved marginally to 16% despite transition cost and currency impact whereas SNC margins was down 56bps YoY. We remain optimistic on the future prospects of NIIT and expect revenue to stabilize within S&C and SLG segment. NIIT has launched new programs in S&C business and added new clients in CLS, which should support future growth. Our FY18E & FY19E EPS stands at Rs.4.6 & Rs.6.5 (earlier Rs.7.7) respectively, our DCF-based TP stands revised to Rs.113 (Rs.110 earlier). We maintain ACCUMULATE.

Shares of NIIT LTD. was last trading in BSE at Rs.102.4 as compared to the previous close of Rs. 103.3. The total number of shares traded during the day was 112374 in over 890 trades.

The stock hit an intraday high of Rs. 105 and intraday low of 102. The net turnover during the day was Rs. 11642423.

Source : Equity Bulls

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