Buy NIIT Technologies; target of Rs 2190: Prabhudas Lilladher
Prabhudas Lilladher is bullish on NIIT Technologies has recommended buy rating on the stock with a target price of Rs 2190 in its research report dated July 29, 2020.
July 30, 2020 / 06:26 PM IST
Prabhudas Lilladher's research report on NIIT Technologies
NIIT Tech Q1FY21 performance was tepid as revenue de-grew 9.6% QoQ (CC: 6.8% QoQ) below ours/cons estimates of -6% USD/5% CC QoQ. EBIT at 11.6% (Ple: 12.5%/ cons: 12.2%), down 230 bps QoQ, impacted by write-off, RSU charges, and weak revenue performance. But, NIIT Tech’s commentary has been strongest among peers for FY21 despite one of the weakest starts. Guidance of mid-single digit growth for FY21 and ~7% QoQ cc growth for next quarter. Management has guided EBITDA margin of ~17.8% in FY21. Strong momentum of 13th consecutive quarter of improving deal win in Q1FY21. Deal wins at USD 186 mn (order intake: +6.3% YoY, executable: +17.7% YoY). NIIT Tech is well-placed to tap the growing needs of the clients in the Digital segment through its acquisition of Incessant, which is growing its revenues in excess of ~16% with margins of >~22%.
NIIT Tech owns many IPs in the insurance and travel verticals. Management team has been revamped completely over the last three years. We see stability of senior leadership as one of the key reasons for the resilient performance.
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