Buy NIIT Tech; target of Rs 600: Religare

Religare's research report on NIIT TechNITEC posted an above-expected Q4 with revenues of Rs 6.8bn (flat QoQ CC). Despite soft revenue growth, operating margins at 14.2% came in better than expectations (13.7%). Importantly, order intake was solid at US$ 120mn in Q4FY16 – the second straight quarter of US$ 100mn+ order intake. We believe this provides revenue visibility and should help drive margins through FY17. Valuations at 8.1x FY18 are cheap, and improving large-deal wins and margin delivery would support a re-rating. BUY.We largely maintain estimates and continue to like NITEC for its order book pipeline, improving large-deal win rates and cheap valuations of 8.1x FY18E EPS. Consistent execution and large deal closures translating into higher new order signings would be the key stock catalysts. Maintain BUY with a Mar’17 TP of Rs 600 set at 10x one-year forward P/E.

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