Strong order pipeline will contribute to growth: NIIT

NIIT Technologies posted lower than expected net profit at Rs 43.1 crore in the second quarter of the current fiscal down 26.7 percent compared to Rs 58.8 crore in the previous quarter due to forex loss.

In an interview with CNBC-TV18, Rajendra S Pawar, Chairman of NIIT Tech said the order intake was very good this quarter and has led to a growth in topline. However, foreign exchange unpredictability has affected their performance to a certain extent, he added.
Going, forward NIIT is looking at a stronger order pipeline that will contribute to its growth. Here is the edited transcript of the interview on CNBC-TV18. Q: I would like to ask you about your margin performance this time around, you have done about 17 percent, give us a view on what your margin performance will look like in the quarters ahead and whether you can better this performance?
A: Part of the unpredictability is because of forex but as you can see in terms of volumes, our topline has grown year-on-year (YoY) 35 percent and the operating profit is up 54 percent. I think there is a solid volume growth and that is coming simply because even in this quarter we have very good order intake, it is Rs 9.3 crore.
We have had a very solid, sustained order intake and in our business that comes for the bulk of the revenue. We have industry leading growth in the topline, we continue to have that and margins are better than the last quarter by almost 100 bps. Again there is that unpredictability that comes in because of foreign exchange which is playing true and for everyone. So making a prediction on that count is difficult. Q: Give us a sense in terms of the order pipeline for the company going forward because it seems like it was pretty strong like you mentioned this quarter, what is the pipeline looking like, what is the average run rate you could possibly clocking in terms of fresh orders in the coming quarters?
A: In the last four quarters we have been between Rs 8 and 9 crore, in fact this quarter’s Rs 9.3 crore is the highest we have had in the last four quarters. We are expecting to stay in this range. Our pipeline is looking good, there is uncertainty due to a bit of an election rhetoric in the US but, that will be behind us as we go forward.
Euro area for us has been very strong even though the conditions there are uncertain. But, some of our customers continue to give a good growth. We are seeing the pipeline getting stronger with time and we have sustained our order intake at a very good level. In our view, we will continue to grow. We see a very strong pipeline. Q: Can you throw some more light on which are the new clients that you have seen this particular quarter within which verticals have they come in at?
A: We have one in travel and transportation which is a key vertical with more than 40 percent of revenues. In BFSI, we have a very good client and then one in general category. Three significant clients have been added in this quarter and as I said, one each in the two verticals and one in the third category. The pipeline is equally strong across our verticals of choice. Q: The last time when we spoke with you, you had said that you will do better than the NASSCOM growth for FY13, do you maintain that guidance and what kind of a growth you hope?
A: Absolutely yes, I think well ahead of that. If you see the last couple of quarters, it is significantly higher. We are looking at industry leading growth, so it will be ahead of the NASSCOM predictions. Q: What about pricing, how exactly did pricing pan out this quarter and what are you expecting in the remaining part of the fiscal?
A: We do not see any significant change. There are some sectors like banking, which are under stress. There are some sectoral changes but by and large since bulk of our key accounts have grown well, in fact our top ten accounts have grown higher than the average on a quarter-on-quarter basis. While our QoQ was 6.5, the top ten are close to 10 percent.
Much of the growth is coming from existing clients at existing rates and we do not see a significant pressure on that account in the industry at this point. Prices are really not a serious concern for the industry at this point in time.
More to come.