Kotak Securities' report on NIIT
"NIIT's 3QFY15 results were lack-lustre and below expectations. CLS was the bright spot and reported a better-than-expected 28% QoQ growth in INR terms. However, ILS reported a higher-than-expected 16% de-growth in revenues YoY, which continues to be a point of concern. Sustained uptrend in MTS and private schools is encouraging. CLS contributed about 76% of the EBIDTA in FY14 and is expected to contribute 81% in FY16. CLS profits are expected to grow by 34% in FY15 and 47% in FY16. However, ILS business continues to impact the overall profitability, though to a lower extent. Our FY15 and FY16 EPS estimates stand at Rs.1.6 (Rs.2.3 earlier) and Rs.5.7 (Rs.5.4 earlier), respectively. While valuations are not demanding, we await initial signs of improvement in IT courses (enrolments) in ILS. Maintain REDUCE with an FY16-based PT of Rs.48 (Rs.47). The company has paid out a dividend of Rs.1.6 per share for FY14 and we expect it to be maintained for FY15", says Kotak Securities research report.
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