NIIT Tech (REDUCE, CMP Rs 545, TP Rs 540) Jun’17 quarter results:
NIIT Tech’s Jun’17 quarter adjusted operating performance was lower than our expectations. Order intake continue to remain modest at US$ 110mn adding no confidence on near term business recovery (12M executable order book at US$ 320mn – up 4% yoy). Revenues in CC terms grew by 1.4% and we expect the momentum to remain soft in the subsequent quarters. While the company has done commendable job on OPM improvement but we believe the re-rating of the stock would be function of revenue growth visibility and thus the stock should underperform in the short term.
We have a Reduce rating on NIIT Tech with a TP of Rs 540.
- NIIT Tech's Jun’17 quarter revenues at Rs 7,089mn (-4.8% qoq, adjusted decline of 1.2%) were tad lower than our estimates of Rs7,123mn (Previous quarter revenues were higher by Rs270mn on one time revenues).
- EBITDA at Rs 1,108mn declined by 12.2%QoQ (reported basis decline of 27% QoQ) implying EBITDA margins of 15.6% (down 480bps QoQ) V/s Emaky est of 17% on account of weaker operating performance and RuleTek integration (one-month integration in the quarter).
- NIIT Tech reported net profit of Rs 513mn (down 40% QoQ, adjusted PAT down 31%).
Other highlights
- Order wins at US$ 110mn (up 9% YoY, down 4% on trailing four quarter average).
- Client addition : 9 (includes 5 on RuleTek integration)
- Overall Headcount increased by ~110 QoQ people during the quarter to 8,963 people but is still lower from yoy basis (headcount down by 59).
NIIT Tech Jun’17 quarterly result summary:
|
In Rs mn
|
Q1FY18A
|
Q4FY17
|
QoQ (%)
|
Q1FY17
|
YoY(%)
|
|
Net sales (US$ mn)
|
109.9
|
110.5
|
-0.6
|
101.0
|
8.8
|
|
Net sales (INR Mn)
|
7,089
|
7,447
|
-4.8
|
6,707
|
5.7
|
|
Operating expenses
|
5,981
|
5,923
|
5,692
|
||
|
EBITDA
|
1,108
|
1,524
|
-27.3
|
1,015
|
9.2
|
|
Margins (%)
|
15.6
|
20.5
|
(480)
|
15.1
|
50
|
|
Depreciation
|
316
|
312
|
326
|
||
|
EBIT
|
792
|
1,212
|
-34.7
|
689
|
14.9
|
|
Margins (%)
|
11.2
|
16.3
|
(510)
|
10.3
|
|
|
Other income
|
58.0
|
-12.2
|
-575.4
|
83.0
|
|
|
Pre-tax profit
|
850
|
1,200
|
-29.2
|
772
|
10.1
|
|
Tax provided
|
295.0
|
265.0
|
80.0
|
||
|
Profit after tax
|
555
|
935
|
692
|
||
|
Minority Interest
|
42.0
|
72.0
|
46.0
|
||
|
Reported Net profit
|
513.0
|
1002.8
|
286.0
|
||
|
Emkay Net profit
|
513
|
863
|
-40.5
|
647
|
-20.7
|
|
EPS, Rs
|
8.4
|
11.3
|
|
12.9
|
|
Source: Company, Emkay Research.
