Buy NIIT Technologies; target of Rs 1250: ICICI Direct

ICICI Direct is bullish on NIIT Technologies has recommended buy rating on the stock with a target price of Rs 1250 in its research report dated July 20, 2018.

Broker Research

September 18, 2018 / 15:19 IST

26 Aug, 2025 12:21

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ICICI Direct's research report on NIIT Technologies

US$ revenues grew 1.7% QoQ to $124.3 million, lower than our expectation of 3.6% and $126.6 million. Constant currency revenue grew 3.3% Rupee revenues increased 4.6% QoQ to Rs 824.9 crore, lower than our estimate of Rs 848.3 crore At 15.8%, EBITDA margins declined ~210 bps QoQ, way below our 16.8% estimate and 120 bps decline. The EBITDA margin decline was mainly on account of wage hike, visa costs and a seasonal decline in the GIS business Reported profit was at Rs 85.8 crore, below our estimate of Rs 91.3 crore on the back of a lower-than-expected operating performance.

Outlook

A healthy performance from its three major verticals (70% of revenue), deal pipeline and order intake along with increasing digital pie would lead to better visibility on improving profitability, going ahead. Hence, we expect rupee revenue, PAT to grow at a CAGR 15.5%, 23%, respectively, in FY18-20E with EBITDA margin expansion to 17.4% in FY20E. Consequently, we recommend BUY on the stock with a revised target price of Rs 1250 (18x FY20E EPS).

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