Accumulate NIIT Technologies; target of Rs 1881: Prabhudas Lilladher

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

live

• bselive
• nselive

Volume

Todays L/H

More

×

Prabhudas Lilladher's research report on NIIT Technologies

NIIT Tech delivered an inline revenue growth of 3.4% QoQ $ terms (2.0% organic cc) to USD 153.7mn (Ple: USD153.2.mn, Cons: USD 155mn). EBIT margin remained flat at 13.9% (-8bps QoQ) (Ple: 14.2%, Cons: 14.5%) due to headwinds from furloughs & investments in digital, we expect margins to expand in Q4FY20E. Management maintained guidance of 18% EBITDA margins in FY20E. Q3FY20 was 11th consecutive quarter of sequential improvement in deal closure. NIIT Tech reported deal win of USD218 mn highest ever with 6 new clients & 4 large deal wins (3 new deal wins) orders executable in one year increased to USD 424 mn, the highest ever. Deals are getting bigger & better every quarter. The management sees no moderation in revenue growth despite tough macro as the company continues to gain wallet share against peers. We expect strong deal wins to drive mid-teen revenue growth and high-teen earnings CAGR over FY20E-22E. NIIT Tech is one of the few mid-cap IT companies that has delivered strong deal wins and robust execution.

Outlook

We have increased our revenue estimates by >~2% for FY21E/22E on account strong order pipeline & steady execution & now value NIIT Tech on 19x earnings multiple on Sep-21 EPS of Rs. 99 to arrive at a changed target price of Rs. 1881. NIIT Tech has rallied 30% since last 3 months & now is trading at 21.5X/19.2X FY21E/22E earnings which leaves limited upside for multiple expansion. Downgrade to Accumulate from Buy.

For all recommendations report, 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