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Last Updated : May 07, 2019 12:18 PM IST | Source: Moneycontrol.com

NIIT Tech delivers stellar FY19 results as transformation strategy pays off

The company changed its strategy for the last eight quarters to focus on emerging tech. It also chose to stick to its three key verticals insurance, banking and financial services.

Swathi Moorthy @kpswathi
 
 
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NIIT Technologies' FY19 results, its best ever, are a reflection of the company’s successful transformation strategy, said Sudhir Singh, CEO.

Speaking to Moneycontrol, Singh said, “It was not the mixture of a couple of metrics. Every operating metric such as revenue, operating margins and profit improved very significantly.”

The company’s net profit grew 44 percent year-on-year (YoY) for fiscal 2019 to Rs 403.3 crore on revenue growth of 23 percent YoY. Operating margin though slipped by 80 basis points.

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NIIT Tech manage to contain attrition, an area of concern for most IT firms, at 12 percent. The company's order intake for FY19 jumped 27 percent to $626 million.

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“We added 40 new clients. We have never ever done that in our history,” Singh said.

Change in strategy

The company changed its strategy for the last eight quarters to focus on emerging technologies to keep up with the changing trends. The company also chose to stick to its three key verticals insurance, banking and financial services and travel and transportation rather than spreading it too thin in other verticals such as manufacturing or healthcare.

While India was one of the significant markets, the company also focussed on other key geographies such as North America and Europe that helped drive growth.

Acquisitions were also one of the key focus areas. The company acquired Whishworks, a company specialised in big data analytics, last month. In May last year, it acquired RuleTek to boost its digital integration capabilities in the US market.

Singh said, “The strategy has worked very well for us and results have been stellar. We are going to pursue this because clients are seeing a perceptible change in the impact they are generating.”

While the three key verticals grew YoY, insurance sector saw a slight dip of 6.5 percent sequentially for the quarter ended March 2019.

Talking about the insurance sector, Singh explained, “In this particular quarter, insurance was the only vertical that declined. The blip that you see is essentially because contracting for our product business out of London got pushed into the first quarter. We will recognize that revenue in quarter one and quarter two."

India was one of the key markets contributing a significant portion of revenue until a few years ago. But the company’s India business has been coming down steadily. The company's overall India business has come down close to 1.4 percent compared to last year. India now accounts for about 8 percent of the overall business, from 9.4 percent last year.

“That is a part of our conscious strategy,” he added.

Singh said the focus area for FY20 would be to ramp up the consulting business it launched last fiscal. "We plan to double the consulting business we launched last fiscal," he added. The company also plans a ramp up in its aggregate product platform and partnership strategy and data cloud automation.

On the impact of Baring PE acquisition of NIIT Tech, Singh said, “At this stage, all the conversations leadership team and I have had, Baring has decided to invest in us for the performance we have churned out. They have indicated to us that they are ready to sit down with us once the process is complete and chart out a strategy that will help sustain and hopefully accelerate the growth that we have seen.”

Baring PE acquired 30 percent stake in NIIT Technologies for Rs 2,627 crore in April. Baring will make an offer to public shareholders of NIIT Technologies for purchasing up to 26 percent additional shareholding, taking the total deal value to up to Rs 4,890 crore.

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First Published on May 6, 2019 05:33 pm
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