Q1FY18 revenues to grow sequentially, margins may expand YoY: NIIT Technologies

Consolidated revenue rose 8.5 percent to Rs 744.7 crore during the January-March quarter of 2016-17.

Below is the verbatim transcript of the interview.

Reema: In the year gone by you did face some client specific issues in your travel segment etc, which depressed the overall growth rate. For FY18, without giving us an exact guidance, which you don't, could you give us a sense of what the revenue growth could look like and will there be an improvement in margins compared to FY17?

A: The year has ended on a positive note. We have had very robust performance in Q4 of this financial year and our growth has been, through the year, on the back of expansion that we have seen in the banks, financial services & insurance (BFSI) segment, in fact in this quarter we saw 5.1 percent growth in the US. So both the BFSI as well as US market has been driving growth for us in this quarter and throughout the year as well.

We did see some softness in the travel space and there have been different issues that have been happening at different points in time, for example the most recent issue has been the travel restrictions that have been put on the Middle Eastern carriers by the US and so they are cutting back on their spends which is also impacting business with some of our clients in that region. So these are some of the factors that have impacted growth in the travel space.

Typically we have seasonality in our GIS business which did extremely well in Q4 this year. We expect it to decline in Q1 of the coming year. However, given the momentum that we have seen in our business in this quarter, we expect to have better revenue in the Q1 of next year as compared to the Q4, of course excluding the benefit that we got as a result of the settlement which we had with government client.

Reema: So Q1 FY18 growth rates will look better than what we saw in Q1 FY17?

A: Not the growth rates but the revenues.

Reema: What can you guide on your margin for full year?

A: On the margins as well we expect to have better margins in the Q1 of the coming year as compared to the same period last year.

Reema: On your travel segment you were talking about the softness there and certain issues. One of your large clients is contemplating restructuring. Could you give us a sense how important this client is in the travel segment, how much does it contribute to overall revenues and how much could it impact your revenues, if they do undergo restructuring?

A: They are only contemplating and it would be inappropriate for me to comment anymore on that. This was only to let it be known that issues in the travel segment could continue which would be client specific related.

Reema: How big is the smart city opportunity for you? You are already offering software for certain products in 17 cities. Currently what are the kind of revenue that you get from smart cities, the kind of margins you enjoy on it and what is the opportunity going ahead?

A: Smart cities is a programme which was initiated by Prime Minister Modi in 2015 where the government decided to create 100 cities which would be smart and sustainable and citizen friendly, of which 60 cities have been identified in three phases and many of them have now initiated their implementation programmes. So the area where we are engaged in smart cities is around a technology platform where we provide services around GIS which are geographical information systems which is essentially a fundamental platform which is used for planning as well as of delivering citizen services for the cities. So of the 40 odd cities who have initiated work around smart cities, 17 of them have put together their requirements for GIS and our platform has been selected in all 17 of them. So there is a tremendous headroom for growth because only 7 cities so far have decided on the platform and there are many more to go.