Buy NIIT Technologies; target of Rs 1460: Prabhudas Lilladher

Prabhudas Lilladher is bullish on NIIT Technologies has recommended buy rating on the stock with a target price of Rs 1460 in its research report dated October 17, 2018.

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October 18, 2018 / 14:36 IST

26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on NIIT Technologies

NIIT Tech delivered strong result for 2QFY19 with beat on revenue, EBIDTA margin and PAT. Revenues at USD132.5mn were up 5.8% QoQ and above our estimates (Ple: USD129.5mn). Constant currency growth for the quarter stood at 7.6% QoQ and above our ests (Ple: 5%). Growth was broad-based across verticals. Insurance/BFS/Travel verticals grew 11/6.2/9.2% QoQ and remained strong. EBIDTA margin at 18% up 215bps QoQ was above our estimate (PLe: 17%). Adjusted EBIDTA Margin (excluding Forex hedge gains/(loss) reported in revenue line) stood at 18.8% for 2QFY19 up 250bps QoQ. PAT for the quarter came at Rs1118mn which is 25% above our estimates led by growth and margin beat as well as higher other income. We believe the measures undertaken by Mr Sudhir Singh (CEO of the company effective January 2018 and CEO Designate from May 2017) appears to be yielding positive results. 2QFY19 performance has been remarkable across verticals, traction in top accounts and new deal wins.

Outlook

NIIT Tech is trading at 15x FY20E EPS which is reasonable considering the strong growth and margin execution. LT Infotech is currently trading at 19.3x FY20E. Hence, NIIT Tech is trading at 23% discount to LTI. Revise TP upwards by 4% to Rs1460sh (18.5x FY20E EPS vs 18.5x FY20E EPS earlier). Our TP upgrade is led by EPS upgrade. Maintain BUY. NIIT Tech remains one of our preferred pick in Midcap IT space. We see potential for continued EPS upgrade trajectory in the stock.

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