Dolat Capital's research report on NIIT
NIIT reported strong results with modest decline of 4% QoQ in revenues (DE 12% decline) as company transformed its delivery to Digital mode across client’s/business segment. EBIT margins stood at 3.2% on strict cost measures and favourable business mix (DE -10%). Strong other income at Rs335mn extended PAT (Rs294mn) beat. CLS business (88% of revenue) reported 2% QoQ growth in reported terms as despite the volume/demand loss due to COVID it benefited from ramp-up of its strong deal velocity of Q3/Q4. S&C segment revenues declined 35% QoQ as hiring sentiment moderates further.
Outlook
NIIT has displayed spectacular transformation by moving its delivery to Digital mode that supported revenue run rate and helped it gain OPM. Ramp-up in sales spends would boost sales while rationalization of non-core businesses would improve profitability further. Maintain Buy rating with TP of Rs 110 (implies modest 4x EV/EBIT).
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