Buy NIIT; target of Rs 110: Emkay

Emkay's research report on NIITNIIT Limited is resurrecting itself for a strong future under the new management, led by Mr. Rahul Patwardhan. The company’s strategy to focus on ‘asset-light’ opportunities, restructuring the Skills and Career segment and carving out the Schools business into a separate subsidiary should revive NIIT’s fortunes and set the base for a strong futureWhile Corporate Learning will continue to remain the mainstay for NIIT, given annuity characteristics and the large addressable opportunity, revamp of the Skills and Career business should aid a turnaround, starting FY16 itselfWe estimate ~5x jump in core business earnings over FY16E-18E, supported by 55% EBITDA CAGR over FY15-18E. The improving financial performance at associate, NIIT Tech is likely to be an added trigger. Initiate coverage with a BUY rating and a SOTP based TP of Rs 110"NIIT is likely to see a turnaround in financial performance starting FY16 itself on the back of both- 1) A recovery in the core Education and Training Business, and 2) Improving financial performance of associate, NIIT Tech (ACCUMULATE, TP Rs 530). We initiate coverage on NIIT Ltd with a BUY rating and a SOTP TP of Rs 110, which values (1) Core Education and Training Business at Rs 78/share (based on 12x FY18E EV/EBITDA, given upsides to our recovery thesis), and (2) Stake in associate company at Rs 32/share (30% discount to our TP of Rs 530)", says Emkay Global Financial Services research report.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.

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