Multi Baggers
COFORGE LTD.
BSE ID : 532541 NSE ID : COFORGE
RECOMMENDED PRICE 500.95
PEAK FROM RECO 6133.00 1,124.27%
CURRENT PRICE 5252.60 Resource id #18
NIIT Technologies provides Application Development Services including custom software development, business intelligence and migration and modernisation to globally dispersed customers. We initiate a 'BUY' on the stock with a target price of Rs.645 with the medium to long term investment horizon.
NIIT Technologies
NIIT Technologies is a leading global IT solutions organization, servicing customers in Americas, Europe, Middle East, Asia and Australia. It offers services in Application Development and Maintenance, Infrastructure Management, IP Asset or Platform Solutions, Business Process Management, and Digital Services to organisations in the Financial Services, Travel & Transportation, Manufacturing/Distribution, and Government sectors.
The company has registered decent results for the quarter ending December 2015. The consolidated revenues grew by 14% to Rs.678.70 crores vs. Rs.595.30 cr. in the year ago quarter. Operating profit grew by 43.27% at Rs.123.50 crores as against Rs.86.20 crores in the corresponding quarter last year. The adjusted net profit surged sharply at Rs.75.40 crore as against Rs.48.20 crore; registering growth of 56% on a y-o-y basis. Margins continued to expand during the quarter and this was mainly on account of reduced SG&A.
Amongst industry segments, BFSI grew 2.1% contributing to 38% of total revenues. Travel and Transportation revenues declined 3.7% resulting to a share of 36% and Manufacturing/Distribution contributed 9%. Revenues from Government contributed 3% of the revenue mix. Head count stood at 9,517 at the end of the quarter with utilization of direct resources at 78.7%.Business in the US contributes to 46% of overall revenues during the quarter. EMEA to 34% while the revenue share from APAC contributed 10% to total revenues and revenues from India contributed to 10% of the mix. Capex spend during the quarter stood at Rs.29.5 crores.
Valuation
With the strong order intake, good pipeline, strong traction in the Digital services business and ramp ups in Q4 may lead to FY17 to be stronger than FY16. We believe the company is trading at an attractive valuation at 10.85x and 9.63x of FY16EPS of Rs.46.17 and FY17EPS of Rs.52.04. We initiate a ‘BUY’ on the stock with a target price of Rs.645 (appreciation of about 29%) with the medium to long term investment horizon.
Disclosure of Interest Statement - Company Name
1. Analyst Ownership of the Stock - No
2. Hem & its Group Company Ownership of the Stock - Yes
3. Hem & its Group Companies' Director Ownership of the Stock - Yes
4. Broking relationship with company covered - No
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