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Multi Baggers

Hem Securities

12.00 AM Feb 16th 2016

NIIT Tech

BSE ID : 532541     NSE ID : NIITTECH

RECOMMENDED PRICE 500.95

PEAK FROM RECO 2057.00 310.62%

CURRENT PRICE 1830.00 265.31%

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

Disclaimer & Disclosure: 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. Analyst Certification The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.

NIITTech_PYT_HemSec.pdf

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