Hold NIIT Technologies; target of Rs 400: Emkay

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.

For all recommendations, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.