Hold NIIT Technologies; target of Rs 400: Emkay

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26 Aug, 2025 12:21

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Emkay Global Financial Services' reportr on NIIT Technologies

NIIT Tech stays focused on 1) growing international business 2) Strengthening Travel vertical and 3) growing IMS business; we acknowledge that these are steps in right direction but outcome remains below par and mixed

Company had healthy client addition in North America in FY15 and traction in IMS revenues however fresh order intake yet to catchup to lend confidence for sustainableimprovement in growth trajectory

Changing business mix coupled with Incessant incorporation to support operating margins in FY16; higher debtor days and capex compared to other Tier II playerscontinue to hamper cash generation for NIIT Tech

We cut earnings estimates by 4/3% for FY16/17E respectively; Valuations at 12/10x FY16/17E P/E are inexpensive, however needs to be seen in the context of patchyfinancial performance and inferior cash generation. Reiterate HOLD with TP of Rs400

"While we moderate our organic revenue growth estimates, incorporation of the recently announced acquisition of 51% stake in Incessant Technologies into our earnings model limits the overall FY16/17E earnings cut by 4/3% to Rs 33.6/39.1 respectively. We build in a 7%/11% overall US$ revenue growth for FY16/17E despite incorporating the consolidation of Incessant acquisition (Incessant’s FY15 revenues of US$ 17 mn). Valuations at 12x/10x FY16/17E P/E are inexpensive relative to Tier II peers, however needs to be seen in the context of NIIT Tech’s patchy financial performance through most of recent times and inferior cash generation. A sustainable improvement in financial performance will need to preclude any hopes of valuation catch up despite the inexpensive valuations. HOLD, TP Rs 400", says Emkay Global Financial Services research report.

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