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Multi Baggers

Hem Securities

12.00 AM Feb 5th 2013

NIIT Tech

BSE ID : 532541     NSE ID : NIITTECH

RECOMMENDED PRICE 259.70

PEAK FROM RECO 477.00 83.67%

CURRENT PRICE 411.15 58.32%

We believe NIIT Technologies Ltd. is trading at an attractive valuation at 7x and 5.99x of FY13EPS of Rs.36.79 and FY14EPS of Rs 42.97. We initiate a 'BUY' on the stock with a target price of Rs 330 with the medium to long term investment horizon.

NIIT Technologies

NIIT Technologies is a leading IT solutions organisation with over 7000 professionals serving customers in North America, Europe, Middle East, Asia and Australia.

The company posted decent numbers for the quarter ending December 2012. The Sales for the quarter ended December 2012 of Rs.514.40 crores rose by 18.80% from Rs.433 crores y-o-y. Operating profit surged by just 4.1% at Rs.81.20 crores as against Rs.78 crores in the like period last year whereas there was a marginal decline by about 4.25% on q-o-q. The company has witnessed lower sequential operating margin due to slowdown in GIS, NITL and transition of new project in Morris. A sharp net profit growth of about 30% at Rs.56 crores was reported for the quarter ended December 2012 compared to Rs.43.10 crores of preceding quarter ended September 2012. There is a sequential increase in other income due to gain on revaluation of current assets and liabilities resulting in higher net profit margins. EPS for the quarter stood at Rs.9.31.

The company incurred a capex of Rs.18 crores during the quarter. BFSI contributed 31%(down by 5.1% qoq) to the revenues; Transportation added 42%( up by 1.8% qoq); Manufacturing & Distribution contributed 6%( up by 4.9% qoq) and Government contributed 8%(up by 56.2% qoq).

The company has witnessed strong growth in domestic business, EMEA & US whereas there was a decline in APAC due to projects going live.

Valuation

With consistent order intake; upbeat guidance and penetration into Tier 2 financial institutions, NIIT Technologies' revenue visibility looks positive. We believe NIIT Technologies Ltd. is trading at an attractive valuation at 7x and 5.99x of FY13EPS of Rs.36.79 and FY14EPS of Rs 42.97. We initiate a 'BUY' on the stock with a target price of Rs 330 (appreciation of about 28%) with the medium to long term investment horizon.

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Disclaimer: This document is prepared for our clients only, on the basis of publicly available information and other sources believed to be reliable. Whilst we are not soliciting any action based on this information, all care has been taken to ensure that the facts are accurate, fair and reasonable. This information is not intended as an offer or solicitation for the purchase or sell of any financial instrument and at any point should not be considered as an investment advise. Reader is requested to rely on his own decision and may take independent professional advise before investing. Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited, Directors and any of its employees shall not be responsible for the content. The person accessing this information specifically agrees to exempt Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and further agrees to hold Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The companies and its affiliates, officers, directors, and employees, including persons involved in the preparation or issuance of this material may from time to time, have long or short positions in, and buy or sell the securities there of, company (ies) mentioned here in and the same have acted upon or used the information prior to, or immediately following the publication.

NIITTech_HemSec_Multibagger.pdf

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