Buy NIIT; target of Rs 120: Emkay

Emkay's research report on NIITNIIT Limited reported revenues of Rs 2.6 bn (+5.7% YoY) slightly ahead of our estimates of Rs 2.5 bn aided by ~3% YoY growth in Skills and Career Group (V/s our estimate of 2.8% YoY decline) and 17% YoY growth in Corporate Learning Solutions business Overall EBITDA margins improved by ~390 bps YoY on back of turnaround in Skills and Career Group with operational break even (EBITDA margin of +0.6% V/s -13.2% in Dec’14 quarter); Net profit was impacted adversely by negative other income Management indicated encouraging response for newly launched Skills and Career Group courses ; pipeline for Corporate Learning Solutions stays healthy Strong Dec’15 quarter performance confirms progress in right direction. We maintain FY17/18E earnings estimates and retain BUY with TP of Rs 120 as we back 1) A recovery in the core Education and Training Business, and 2) Improving financial performance of associate NIIT Tech We largely maintain FY17/18E earnings estimates (with 0.5%/-0.7% revision respectively) while we cut FY16E earning by ~10% led by losses in School business and higher nonoperating expenses. We retain BUY with an unchanged TP of Rs 120. Dec’15 quarter continues to lend confidence on ‘Resurrecting for a Strong Future’ thesis for the company as the management focus on reinvigorating the Skills and Career Group starts showing results.

For all recommendations, click here 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.

Read More