Motilal Oswal's research report on NIIT TechIn FY16, NIIT Technologies’ (NITEC) EBITDA margin expanded by 308bp, driven by reduced government business, focus on increasing international revenue and driving improvement in operational efficiencies. In 4QFY16, the expansion of 20bp in EBITDA margin was higher than expectation and was driven by higher revenue from the GIS business. NITEC won deals with a TCV of USD120m in 4QFY16, thus taking its total to USD420m for FY16, which was lower than USD425m in FY15. This has resulted in the executable order book remaining in the USD295m-301m range for the last eight quarters, leading to yet another year of sub-par organic growth rate. We expect NITEC’s USD revenue to grow at a CAGR of 8.4% over FY16-18. With the margin levers already utilized last year, sustainability/expansion will now depend on a revival in revenue growth. In order to factor in the missing momentum, we are lowering our FY18E target multiple to 10x and revising our target price to IN R560. Neutral. 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.
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