ICICIdirect.com's report on NIIT Technologies
NIIT Tech reported its Q4FY15 earnings, which were above our estimates. Quarterly growth was led by the insurance, manufacturing and government business while BFS and transportation were weak
US$ revenues grew 2.1% QoQ to $98.1 million, above our $96 million estimate. Constant currency revenues grew 3.3% QoQ
At 16.3%, adjusted operating margins were up 183 bps QoQ, above our estimate (15%, 49 bps QoQ improvement) led by revenue beat and productivity initiatives (offshoring, utilisation)
The company reported a loss of Rs 17.5 crore, higher than our Rs 11.7 crore loss estimate, led by exceptional loss of Rs 80 crore (Rs 60 crore estimate), f/x loss partially offset by lower tax expenses
"We expect NTL to report revenue, adjusted (for exceptional loss in Q4FY15) earnings CAGR of 9%, 16% in FY15-17E (average 16.3% EBITDA margins in FY16-17E), vs. 21%, 9% reported in FY10-15 (average 17.2%), respectively. Though NTL has restructured its 1) sales function, 2) execution efforts under the COO and continues to win healthy order bookings, ailing execution continues to cloud perceptible outcomes and dictates our HOLD rating. We continue to value NTL at ~8x its FY17E EPS of Rs 42.5 to arrive at our target price of Rs 350", says ICICIdirect.com research report.
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