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Last Updated : Jan 14, 2015 04:27 PM IST | Source: CNBC-TV18

Strong deal pipeline to boost margins: NIIT Tech

According to Sudhir Chaturvedi COO, NIIT Technologies margins for the company are on an upward trend on back of good order intake, especially from US market business.


Sudhir Chaturvedi COO, NIIT Technologies in an interview to CNBC-TV18 spoke about the third quarter numbers and the business outlook going forward.

According to him margins for the company are on an upward trend on back of good order intake, especially from US market business.

In Q3 the company had USD 109 million fresh order intake of which 55 percent was from the US and about 30 percent from Europe, said Chaturvedi.

Moreover, the deal pipeline indicates an executable order book of about USD 300 million in constant currency terms, which will help margin improvement in Q4.

He said: “Our trend of signing one large deal per quarter will continue for Q4 as well, so we are sure to see growth uptick going forward.”

However with regards to their insurance business the company continues to see some softness but are hopeful of overcoming that with the new deals signed, he said. And apart from some softness seen in Eurozone where there is some uncertainty with regards to quantitative easing, Greece exit etc., the environment for growth in other markets in UK and US is strong.

For Q3FY15 (QoQ) the revenues for the company were up 1.1% at Rs 595.3 cr versus  Rs 588.3 cr . EBITDA stood at Rs 86.2 crore versus Rs 82.2 crore. EBITDA margins came in at 14.5% versus 14%.

The company reported higher profit after tax (PAT), up 20% at Rs 48.2 crore versus Rs 40.1 crore.

Below is the transcript of Sudhir Chaturvedi's interview with CNBC-TV's Reema Tendulkar.

Q: You have managed to improve your margins on a quarter-on-quarter (QoQ) basis. It currently stands at 14.50 percent but in one of your previous interactions you indicated that the FY15 exit margin level would be 16 percent. Are you on track to report a 150 bps margin improvement in Q4?

A: As you rightly said margins are on upwards trend since Q1. We have increased our margins from 13.4 percent in Q1 to 14.50 percent and we are on track to be about 16 percent exit in Q4 as we continue to see good trends of order in take in the business especially from the US market.

Reema: Speaking about your revenues we have seen a pick up in your growth. So the constant currency growth this time has come in at 1 percent versus a degrowth in the previous quarter. Will Q4 be a better quarter in terms of a revenue growth and what is FY15 revenue growth going to look like for the full year?

A: If you see our performance this quarter, we had a USD 109 million of fresh order intake of which 55 percent was from the US and about 30 percent from Europe. A significant part of this USD 109 million comes from new logos, so these are essentially new revenues from new logos. The other thing that we have done is, we have had a trend of signing one large deal per quarter and we have continued that trend with one large deal this quarter with a large insurance, major in the US.

So given the order intake and the deals we expect to see an uptake in our growth going forward. We do not give guidance as such but you know the pipeline for deals that has already been signed indicates executable order book of USD 300 million odd of constant currency and we should see that uptake in quarter IV and inline with that a margin improvement.

Q: The company in the first half of the year had been plagued by certain client specific issues particularly in insurance vertical. Is the worst of the client specific issues behind the company now?

A: We still see some softness in insurance although we should cover that with some of the new deal signings that we have done. We are seeing some continued softness in the euro zone where the macro and the uncertainty around various issues like quantitative easing in the euro zone or it is the looming Greek exit other than those two factors there is some softness in insurance and some uncertainty in the euro zone.

The environment for growth in the other US markets as well as in the UK market is strong so we continue to see traction in those markets and that is what we would be focusing on.



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First Published on Jan 14, 2015 04:02 pm
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