Buy NIIT Tech; target of Rs 380: Nirmal Bang

Nirmal Bang is bullish on NIIT Technologies and has recommended buy rating on the stock with a target of Rs 380 in its October 2012 research report.

“NIIT Technologies (NIIT Tech) reported a net profit of Rs.43.1 crore in Q2FY’13 compared to Rs.57.5 crore during Q1FY’13. Net Sales for the quarter stood at Rs.500.1 crore, registering an increase of 10.1 per cent q-o-q. Order intake during the quarter stood at USD 93 million taking the total executable order book to USD253 million over the next 12 months. Volume growth in constant currency terms stood at 3 per cent q-o-q. On account of restatement of forex liabilities, the other income segment registered a loss of Rs.15 crore, resulting into lower than expected profits. EPS for the quarter stood at Rs.7.18, cash and cash equivalent adds up to Rs.232 crore, translating into Rs.38.6 per share. This is equal to ~14 per cent of the present price of the company.”

“Order intake during the quarter stood at USD93 million with USA(USD43 mn), EMEA (USD 33mn) and ROW(USD17 mn). Historically, the company has maintained an order inflow of anywhere between USD70-90 million per quarter, taking the total order position in excess of USD250 mn.  The Other Income component registered a loss of Rs.15 crore during this quarter on the back of forex, resulting into lower than expected PAT.  The company management anticipates the pricing scenario to get tough going forward, mainly in the BFSI segment.  The management does not see any issues with regard to order execution over the next 12 months. The order books as on date is quite healthy at USD253 mn.”

“We expect the company to post net sales of Rs.1970.3 crore for FY’13E. The net profit for FY’13E is expected to be Rs.228 crore, translating into an EPS of Rs.38. The cash and cash equivalent stands at Rs.232 crore translating into Rs.38.6 per share. This is equivalent to ~14 per cent of the present price of the company. We value the company at 10x FY’13E EPS of Rs.38 to arrive at a price target of Rs.380,” says Nirmal Bang research report.

Public holding more than 90% in Indian cos

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