Sell NIIT Technologies; target of Rs 1540: Dolat Capital

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26 Aug, 2025 12:21

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Dolat Capital's research report on NIIT Technologies

NITEC reported revenue decline of 6.8% QoQ in CC terms (DE -8%), led by sustained traction in non-Travel verticals (up 3.2% QoQ). EBIT margins stood at 11.6% (down 240bps QoQ) well ahead of our estimate of 10.7%. PAT was down 30% QoQ at Rs799mn (DE Rs934mn) owing to provisioning of Rs180mn towards receivables. Added strong TCV of about US$186mn during the quarter implying growth of about 13% on TTM basis at US$760mn. Deal addition include 3 significant deal one each in BFSI/Travel/Airport vertical. Beyond these deals NITEC also signed two additional significant deal in July’20. Outlook remain confident as it expects to deliver sequential growth of 7%+ in CC terms in Q2 with 150bps gains in OPM QoQ. Sharp recovery in Q2 would help it achieve its annual outlook of mid-single digit growth for FY21 and EBIDTA margins (pre-RSU) of 17.8%.

Outlook

Better-than-expected Q1, Sustained traction in Non-Airlines customers and robust deal traction supports confident growth/margin outlook for FY21. Factoring in these we upgrade our earnings estimates by 6% for 22E and maintain our Sell rating on the stock with TP of Rs1,540 valued at 18x FY22E earnings (inline with its 3 year Median PER).

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