ICICIdirect.com's report on NIIT
NIIT reported its Q2FY15 results, which were ahead of our estimates led by healthy growth in the CLS business
Revenues declined 1% YoY to Rs 260.4 crore (Rs 247.3 crore estimate), led by 26% YoY growth in the CLS business to Rs 124.8 crore. The ILS business declined 21% YoY to Rs 100.4 crore while SLS declined 11% YoY to Rs 31.8 crore
EBITDA margins declined 230 bps YoY to 7%, above our 6.8% estimate, led by growth in the higher margin CLS business and cost optimisation initiatives in the ILS and SLS businesses
Reported PAT of Rs 10.3 crore was above our Rs 4.2 crore estimate led by margin beat, lower depreciation and interest expense "We estimate NIIT will report revenue, earnings CAGR of 7%, 108% over FY14-16E (average 8.7% EBITDA margins in FY15-16E). Note, we expect standalone NIIT to report Rs 2.6 crore loss in FY15E and Rs 14.9 crore profit in FY16E. We continue to value NIIT on SOTP basis to arrive at our target price of Rs 45, i.e. a combination of EV/EBITDA multiple and applying 15% discount for its holding in NIIT Tech and maintain our HOLD rating on the stock with a target price of Rs 45", says ICICIdirect.com research report.
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