Motilal Oswal neutral on NIIT Technologies

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26 Aug, 2025 12:21

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Motilal Oswal has maintained neutral rating on NIIT Technologies with a target of Rs 310 in its January 17, 2013 research report.
 
“NIIT Technologies (NITEC) reported revenue of INR5,144m (up 2.9% QoQ) for 3QFY13, higher than our estimate of INR5,001m. Revenue growth in constant currency was 4.4% QoQ v/s our estimate of 3.9% QoQ. However, excluding hardware components, constant currency revenue growth was just 1.8% QoQ.”
 
“EBITDA margin declined 120bp QoQ to 15.8% v/s our estimate of 50bp QoQ expansion to 17.5%. Key factors driving the sequential margin decline include: [1] lower profitability in the traditionally higher margin segments - GIS and NITL (~60bp as per our calculations), and [2] transition costs in the new deal bagged from Morris (~40bp impact). PAT was INR561m, marginally higher than our estimate of INR550m, due to forex gain of INR103m. NITEC signed orders with a TCV of USD83m in 3QFY13. Its executable order book over the next 12 months is USD242m, staying within the band of USD230m-255m for the sixth consecutive quarter. The management, however, guided an improvement in the metric for the next quarter, which is seasonally the strongest for NITEC. The company reiterated its outlook of FY13 revenue growth exceeding 14%, despite a non-exciting first half. It also guided margin expansion, with a slight uptick in 4Q and a significant turnaround in the trajectory not before the beginning of FY14.”
 
“We have revised our EBIT margin estimates downwards for FY14/15 by 71bp/115bp, driving 6.1%/4.8% cut in our EPS estimates. We expect the company to grow its USD revenue at a CAGR of 15.5% over FY13-15 and EPS at a CAGR of 9.5% during this period. NITEC trades at a significant discount to its peer group. Turnaround in growth rates at NITL and GIS and improvement in margin profile of existing and new large deals over time will be the key drivers to a change in our view. Neutral,” says Motilal Oswal research report.

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