Buy NIIT Tech; target of Rs 290: PINC Research

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Buy NIIT Tech; target of Rs 290: PINC Research

PINC Research is bullish on NIIT Tech and has recommended buy rating on the stock with a target of Rs 290 in its January 18, 2012 research report.

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RELATED NEWS Buy HCL Tech; target of Rs 530: Prabhudas Lilladher Buy ING Vysya Bank; target of Rs 491: Nirmal Bang Buy HCL Tech; target of Rs 494: KRChoksey ALSO READ See previous views by PINC 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?

PINC Research is bullish on NIIT Tech and has recommended buy rating on the stock with a target of Rs 290 in its January 18, 2012 research report.

"NIIT Tech, reported revenues increased 16.7%QoQ to Rs4,330mn. Dollar revenues grew 3.6%QoQ to USD85.4mn in-line with our expectations. In constant currency, revenue growth was 7.8%QoQ driven by sequential volume growth. EBITDA margin was 18%, 319bpsQoQ higher than last quarter's reported margin (but flattish QoQ if we remove one-time charges in Q2). PAT increased 39.7%QoQ aided by higher other income due to translation gains. EPS for Q3FY12 was Rs10.77."

"EMEA and US led the growth with an increase of 19.8%QoQ and 16.7%QoQ on the back on integration of Proyecta Sistemas and ramp up of recent transformational deal. APAC grew 16.7%QoQ and India revenues increased 7%QoQ. NIIT Tech won deals worth USD75mn during Q3FY12 which includes USD56mn deals from EMEA. Order book executable over next 12 months is at USD245mn (USD137mn in Q3FY11 and USD232mn in Q2FY12). Added 4 new customers during the quarter. Added 245 employees in Q3 taking total headcount to 6,978. Utilisation declined 200bps to 80%. Attrition rate cooled down to 12.5% in Q3; -90bpsQoQ & - 590bpsYoY."

"NIIT Tech has outperformed with good performance. Though BFSI is expected to be sluggish but support from other verticals helped in healthy order book. For FY13, we have revised our volume estimates downwards and also revised INR/USD rate to 49 (earlier 46.5) in-line with large IT firms. We expect ramp ups in FY13 on large deals & improvement in margin due to increased offshoring and absence of one-time expenses which happened in FY12. Subsequently, our FY13 EPS is revised 8.2% upwards to Rs38.6. We maintain 'BUY' recommendation with a TP of Rs 290 based on 7.5x FY13E EPS," says PINC Research report.    

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