ICICI Direct recommended hold rating on NIIT Technologies with a target price of Rs 1075 in its research report dated May 10, 2018.
ICICI Direct's research report on NIIT Technologies
US$ revenues grew 4.7% QoQ to $122.2 million, better than our expectation of 2.7% and $119.8 million. Revenues in constant currency grew 4.3% QoQ Rupee revenues increased 4.3% QoQ to Rs 788.8 crore, better than our estimate of Rs 771.2 crore At 18.0%, EBITDA margins expanded 90 bps QoQ, above our 60 bps expansion and 17.7% estimate mainly on account of increased digital and product business as well as operational efficiencies Reported profit grew 13.7% sequentially to Rs 86.1 crore, ahead of our estimates of Rs 83.1 crore on account of a better-than-expected operating performance. However, it was partly offset by a higher effective tax rate (22.8% vs. 16.5% in Q3FY18).
NIIT Tech reported Q4FY18 results wherein it reported a much better-than-expected operating performance. The commentary on the outlook front is positive with strong order intake. Hence, we tweak our estimates and now anticipate rupee revenue, PAT to grow at a CAGR 12.5%, 17.6%, respectively, in FY18-20E. However, after the sharp run up in the last six months, the stock now captures the growth potential leaving limited upside at the current level. Hence, we maintain our HOLD rating with a revised target price of Rs 1075 (17x FY20E EPS).
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