Buy NIIT Tech; target of Rs 273: SPA Research

9336 Investors following NIIT Tech. Share this News with them.

0

Like this story, share it with millions of investors on M3

Buy NIIT Tech; target of Rs 273: SPA Research

SPA Research is bullish on NIIT Tech and has recommended buy rating on the stock with a target of Rs 273 in its January 19, 2012 research report.

Post your opinion here

 

0

Tweet

Share on Tumblr

RELATED NEWS Buy TCS; target of Rs 1340: Arihant capital markets Accumulate TCS; target of Rs 1262: Angel Broking ALSO READ See previous views by SPA Research See what other Experts & Brokerages are saying about NIIT Tech See messages about NIIT Tech NIIT Tech BSE | NSE 30/05/12 Are Mutual Funds betting on NIIT Tech?

SPA Research is bullish on NIIT Tech and has recommended buy rating on the stock with a target of Rs 273 in its January 19, 2012 research report.

"NIIT Tech (NTL) came out with its 3QFY12 results, a 16.7% sequential INR revenue growth, boosted by 7.8% volume growth and 8.9% contribution from INR depreciation. The company sits pretty on a 12 month executable order book of $245mn, sufficient to support it for the next 3 quarters."

"The company witnessed a sequential volume growth of 7.8% (US - 7.2% and Europe - 13.3%). The above expectation, 3QFY12 revenue of INR 4,330mn (est. INR 4,086.1mn) was also helped by sharp fall (10.5%) in INR. The pricing remained stable. The company witnessed new order intake of $75mn, up 50% YoY, taking the current order book to record levels of $245mn. The company saw full quarter revenue contributions from (i) Morris JV (INR 243 Mn) (ii) Proyecta acquisition (INR 151mn) and (iii) CCTNS deal."  NTL witnessed a 319bps improvement in its EBITDA margins sequentially. However, adjusting for the one time legal and professional charge the company paid in 2QFY12 (INR 119mn) towards Morris and Proyecta deals, the margins remained flat at 18% in-line with our estimates. The INR depreciation benefit of 183bps was fully offset by higher transaction charges from the Morris transformational deal. Morris deal will continue to have zero margin contribution uptill 4Q, after which offshoring will improve margins. CCTNS deal ($40mn) with its 60% hardware component spread over 8 quarters could be another margin headwind."

"Keeping in view the INR volatility we have revised our FY12/13 estimates. Though we continue to factor-in a lower volume growth in FY13 (14.5%) due to prevailing macro scenario and delay in project startups, we expect NTL to be able to weather the storm given its large order book. Considering a sharp INR appreciation (2.4% since 3QFY12) would impact margins, we have lowered our EBITDA margin expectations for FY13E which has resulted in FY13E EPS of INR 39.2 as against earlier estimate of INR 38.9. Thus, we continue to recommend BUY on the stock with a 15 month target price of INR 273 based on 7x FY13E earnings," says SPA Research report. 

FIIs holding more than 30% in Indian cos

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment