Buy NIIT Technologies; target Rs 385: Dolat Capital

Dolat Capital is bullish on NIIT Technologies and has recommended buy rating on the stock with a target price of Rs 385 in its January 15, 2013 research report.

"NIIT Tech, revenue in reported currency grew by 3% QoQ at Rs 5.1 bn from Rs 5 bn in Q2FY13 driven by strong growth of 56% QoQ in Government sector. Volume grew by 4.4% in constant terms. Revenues for ROOM solutions were soft owing to certain catastrophic events in Japan/US/ EU impacting demand scenario from commercial insurance space. It has also hinted better volume growth in CY13 versus CY12 based on the order pipeline and improved outlook in serviced verticals (specifically in the Travel & Transportation) New deal momentum on: NIIT Tech added fresh orders of about USD 83mn during the quarter leading to USD 242mn of firm business executable over next 12 month basis. It has added 4 new clients (2 in Manufacturing, 1 each in Transport and Government). The company expects sustained demand even for the non-linear business segment both for the managed services and transaction based services in the Morris account. It has added a USD 10mn deal during the quarter from an existing client. EBIT degrew by 5% (QoQ) at Rs 671mn (EBIT margin down by 120bps QoQ) on account of lower offtake in NITL revenues and sustained cost overruns in the GIS segment. GIS segment witnessed operating loss of 7% (regular margins are 25%) and would see recovery subsequently Q4 onwards as the concerned project is about to conclude and also Q4 is traditionally strongest quarter for the GIS revenues. We maintain our BUY rating with a target price of Rs 385 valued at 8x of FY15E EPS of Rs 48," says Dolat Capital research report. FIIs holding more than 30% in Indian cos Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. To read the full report click on the attachment

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