Buy NIIT Technologies; target of Rs 1365: ICICI Direct

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26 Aug, 2025 12:21

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ICICI Direct's research report on NIIT Technologies

NIIT Technologies reported robust set of Q2FY19 numbers. The growth in revenues was across verticals in CC terms. The company’s revenue in constant currency grew by 7.6% QoQ (vs our estimate of 4.0% QoQ). US$ revenues grew 5.3% QoQ to $130.9 million, above our expectation of 3.2% Rupee revenues increased 10.0% QoQ to Rs 907.4 crore (above our estimate of Rs 898.5 crore) mainly led by insurance vertical (up 11.2% QoQ in CC terms) and travel and transport vertical (up 9.2% QoQ) EBITDA margin increased 220 bps QoQ to 18.0% (above our estimate of 17.0%) mainly led by 90 bps improvement in gross margin and SG&A operating leverage Order intake grew robustly 6% QoQ to $160 million of which 2 deals were in excess of $20 million and 3 deals were >$10 million.

Outlook

Sustained deal pipeline, large deal wins, robust growth across verticals, improving client mining & hunting and improving digital revenues is expected to drive top-line and margins in coming years. Hence, we expect rupee revenue, PAT to grow at a CAGR 18.3% & 29%, respectively, in FY18-20E with EBITDA margin expansion to 17.8% in FY20E. Consequently, we maintain our BUY rating with a revised target price of Rs 1,365 (18x FY20E EPS).

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