niit technologies niitec) - icici...
TRANSCRIPT
ICIC
I S
ecurit
ies –
Retail E
quit
y R
esearch
Result
Update
October 24, 2019
CMP: | 1475 Target: | 1415 ( -4%) Target Period: 12 months
NIIT Technologies (NIITEC)
HOLD
Revenue driven by acquisition, organic growth…
NIIT Technologies reported revenue growth of 7.3% QoQ in US dollar terms
mainly led by acquisition of Wishworks and organic growth of ~3.0% QoQ.
Revenue growth was led by growth in insurance (14.8% QoQ) and BFS
vertical (14.1% QoQ). Further, digital (38% of revenues) grew 20.0% QoQ
and 54.1% YoY, supporting revenue growth. Going forward, based on the
order book momentum, healthy deal pipeline and Wishworks acquisition,
we expect revenue growth to surpass growth in most mid-tiers.
Large deal wins, healthy order book to drive revenues
Wining large deals, hiring senior leaders in sales position, higher
commission to sales for wining large deals, scaling the new wins, mining
existing clients and strategic acquisition has been the key strategy of the
company to drive revenues in the long term. This strategy has led to highest
order book for the company in recent quarters and robust organic growth.
The strength of the strategy is also visible in the current quarter in which the
company reported organic growth of 3.0% QoQ despite headwinds from
one of its BFS client. Going forward, although we expect BFS softness and
furloughs to impact Q3 revenues, we believe 1.2x book to bill ratio, trailing
12 month order book growth of 11.6% YoY, healthy digital revenues and
robust H1FY20 revenue growth will drive FY20E revenues. This coupled with
acquisition of Wishworks and mining of existing clients is expected to result
in rupee revenue CAGR of 12.7% over FY19-21E.
Margins to remain robust
Margins in Q1FY20 were impacted by one off expenses of ex-gratia payouts
and M&A related charges leading to reported margins of 14.4%. Hence, in
Q2FY20 reported margins grew 385 bps. However, on an adjusted basis, the
company reported margin growth of 141 bps led by SG&A optimisation and
improvement in gross margin. The company has a target to achieve EBITDA
margin of 18% for FY20E although it did not provide the respective guidance
for the same. We believe the absence of GIS and Wishworks in one quarter
will restrict the company’s ability to achieve its target mark. However, we
expect EBITDA margins to improve to 18.0% in FY21E from 17.7% in FY20E
led by revenue growth and high margin digital segments.
Valuation & Outlook
NIIT Tech has reported robust revenue growth on large deal wins and
healthy order book. This is expected to continue in coming quarters. In
addition, the company’s growth profile is better than peers. However, the
recent price run up in the stock factors in most positives. Hence, we maintain
our HOLD recommendation on the stock with a revised target price of
| 1,415/share (PE of 17x on FY21E EPS).
Key Financial Summary
s\
Financials FY17 FY18 FY19 FY20E FY21E CAGR (FY19-21E)
Net Sales 2,802 2,991 3,676 4,167 4,670 12.7%
EBITDA 485 501 645 738 841 14.1%
EBITDA Margins (%) 17.3 16.8 17.6 17.7 18.0
Net Profit 228 280 398 457 511 13.3%
EPS (|) 40.8 45.6 65.7 73.6 83.2
P/E 35.9 32.3 22.1 20.3 17.7
RoNW (%) 14.8 15.8 19.5 19.2 19.2
RoCE (%) 18.7 19.4 25.2 23.5 23.8
*P&L actual, BS, CF calculated; Source: Company, ICICI Direct Research
Particulars
Particular Amount
Market Capitalization (| Crore) 8,930.7
Total Debt (| Crore) 6.4
Cash & Investments (| Crore) 410.8
EV (| Crore) 8,526.3
52 week H/L 1540/ 1031
Equity capital 61.2
Face value 10.0
Key Highlights
A 1.2x book to bill ratio, TTM order
book growth of 11.6% YoY, digital
revenues and robust H1FY20 will
drive FY20E revenues. This coupled
with acquisition of Wishworks and
mining of existing clients is expected
to result in revenue CAGR of 12.7% in
FY19-21E
EBITDA margin is expected to remain
robust in coming quarters
Recent run up in stock factors in most
positives. Maintain HOLD rating
Research Analyst
Devang Bhatt
Deepti Tayal
ICICI Securities | Retail Research 2
ICICI Direct Research
Result Update | NIIT Technologies
Exhibit 1: Variance Analysis
Q2FY20 Q2FY20E Q2FY19 YoY (%) Q1FY20QoQ (%) Comments
Revenue 1,038.5 1,033.4 907.4 14.4 962.7 7.9
Dollar revenue growth led by healthy growth in insurance and
BFS vertical. Further, digital (38% of revenues) supported
revenue growth. The company reported organic growth of
~3.0% QoQ
Employee expenses 679.6 651.0 589.7 15.2 637.4 6.6
Gross Margin 358.9 382.4 317.7 13.0 325.3 10.3
Gross margin (%) 34.6 37.0 35.0 -45 bps 33.8 77 bps
SG&A expenses 169.1 196.3 154.3 9.6 186.4 -9.3
EBITDA 189.8 186.0 163.4 16.2 138.9 36.6
EBITDA Margin (%) 18.3 18.0 18.0 27 bps 14.4 385 bpsSG&A optimisation and gross margin expansion led to
improvement in EBITDA margins
Depreciation & amortisation 44.7 43.4 31.9 40.1 40.1 11.5
EBIT 145.1 142.6 131.5 10.3 98.8 46.9
EBIT Margin (%) 14.0 13.8 14.5 -52 bps 10.3 371 bps
Other income (less interest) 7.6 18.9 21.5 -64.7 17.2 -55.8
PBT 152.7 161.5 153.0 -0.2 121.7 25.5
Tax paid 27.6 40.4 36.3 -24.0 31.8 -13.2
PAT 119.5 119.0 111.8 6.9 87.7 36.3 Robust growth in PAT is due to one offs in previous quarter
Key Metrics
Closing employees 10,800 11,297 10,025 7.7 10,297 4.9 Added 503 employees of which 150 were freshers
Attrition (%) 12.3 12.9 10.8 150 bps 12.9 -60 bps Attrition declined in the quarter
Overall utilisation (%) 80.7 80.5 80.4 30 bps 80.5 20 bps
Average $/| 69.8 70.4 69.3 0.8 69.5 0.5
Source: Company, ICICI Direct Research
Exhibit 2: Change in estimates
FY19 Comments
(| Crore) Old New % Change Old New % Change
Revenue 3,676 4,117 4,167 1.2 4,587 4,670 1.8Revision of FY20E revenue estimates taking into
account rupee depreciation
EBITDA 645 741 738 -0.5 835 841 0.7
EBITDA Margin (%) 17.6 18.0 17.7 -33 bps 18.2 18.0 -23 bps EBITDA margins to stabilise at 18.0% in FY21E
PAT 403 456 452 -0.9 515 511 -0.9
EPS (|) 65.7 74.3 73.6 -0.9 83.9 83.2 -0.9
FY21EFY20E
Source: Company, ICICI Direct Research
ICICI Securities | Retail Research 3
ICICI Direct Research
Result Update | NIIT Technologies
Conference Call Highlights
Long term revenue outlook – The company has been able to register
robust growth over the years mainly led by wining large deals, hiring
senior leaders in sales position, higher commission to sales for
wining large deals, scaling the new wins and acquisition. This
strategy has enabled the company to generate healthy order & deal
pipeline leading to robust growth in revenues and margins. It is also
expected to be a long term driver of revenue growth in coming years
Near term revenue outlook – In Q2FY20, the company registered
revenue growth of 7.3% QoQ mainly led by acquisition of
Wishworks and organic growth of ~3.0% QoQ. Going forward, the
company expects Q3 to be impacted by furloughs and softness in
BFS clients. The company is expected to be back to its healthy
growth in Q4. However, softness in BFS client is expected to
continue. Healthy H1 growth coupled with acquisition of Wishworks
(Q2FY20 revenue was at | 42.5 crore and margins of 28%) and
robust order intake is expected to drive revenue growth in FY20E
Margin trajectory – The company has a target to achieve EBITDA
margin of 18% for FY20E although it did not provide the respective
guidance for the same. Divestment of high margin GIS business
would be offset by Wishworks acquisition, which has a similar
margin profile. However, in FY20E, we expect the company to
marginally fall short of 18% margins due to absence of GIS &
Wishworks business in Q1FY20
Vertical wise commentary – The company indicated that BFS was
impacted due to softness in one of its clients. However, the
company’s insurance business continues to do well due to winning
of material deal with large clients. In addition, the company
registered healthy growth in travel & transport vertical led by ramp
up in top accounts in the US and EMEA. The company’s verticals
(insurance, travel) are still not impacted by the ongoing Brexit
related issues
Digital business - Digital business now contributing 38% to revenues
grew 20.0% QoQ and strong 54.1% YoY in this quarter. The
acquisition of Wishworks has also augmented the company’s digital
revenues. The company has hired Arun Varadarajan. He has rich
experience in digital technologies and will head the company’s
digital business
Improving deal wins – The company’s order intake has been
consistently showing healthy position. Order intake grew 0.6%
sequentially to $176 million and the executable order book over the
next 12 months grew 2.5% sequentially to US$405 million. The
company added 10 new customers of which seven were from the
US, two from RoW and one from EMEA
Client position – In terms of client metrics, the client size increased
by four to 95. Revenues from top five customers (29% of revenues)
grew 15.3% QoQ mainly due to lower base. While top 6-10
customers (39% of revenues) declined 10.5% sequentially
Employee update - Employee strength was at 10,800 with net
addition of 503 employees in the quarter. This includes addition of
Wishworks and the company added ~150 freshers. Attrition rate
declined 60 bps QoQ to 12.3% in the quarter while utilisation
increased 20 bps sequentially to 80.7%. The company’s cash flow
was impacted in the quarter due to increase in DSO days to 73 from
67. The company expects cash flow to normalise in coming quarters
ICICI Securities | Retail Research 4
ICICI Direct Research
Result Update | NIIT Technologies
Key Metrics
Exhibit 3: Geography-wise split up
Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20
Revenue by geography (%)
America 50.0 49.0 49.0 49.0 49.0 49.0
EMEA 32.0 34.0 33.0 33.0 35.0 37.0
RoW 18.0 17.0 18.0 18.0 16.0 14.0
Growth QoQ (%)
America 6.0 3.2 3.0 2.3 0.4 7.3
EMEA 1.7 11.9 0.0 2.3 6.5 13.5
RoW -8.4 -0.5 9.1 2.3 -10.8 -6.1
Source: Company, ICICI Direct Research
Exhibit 4: Vertical wise split up
Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20
Revenue by verticals (%)
Banking & financial services 17.0 16.0 15.0 16.0 16.0 17.0
Insurance 29.0 29.0 30.0 28.0 29.0 31.0
Transport 27.0 27.0 26.0 27.0 28.0 28.0
Others 28.0 28.0 29.0 29.0 27.0 24.0
Growth QoQ (%)
Banking & financial services 8.1 -0.9 -3.4 9.1 0.4 14.1
Insurance 5.4 5.3 6.6 -4.5 4.0 14.8
Transport 5.7 5.3 -0.8 6.2 4.1 7.3
Others -5.0 5.3 6.7 2.3 -6.5 -4.6
Source: Company, ICICI Direct Research
Exhibit 5: Service-wise split up
Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20
Revenue by service mix (%)
SI & PI 3.0 4.0 4.0 4.0 1.0 1.0
IP Assets 7.0 6.0 6.0 5.0 6.0 5.0
Managed Services 19.0 18.0 18.0 17.0 17.0 17.0
Application Development & Management 68.0 68.0 68.0 70.0 72.0 74.0
BPO 3.0 4.0 4.0 4.0 4.0 3.0
Growth QoQ (%)
SI & PI -23.7 40.4 3.0 2.3 -74.9 7.3
IP Assets 1.7 -9.7 3.0 -14.7 20.5 -10.5
Managed Services 1.7 -0.2 3.0 -3.4 0.4 7.3
Application Development & Management 4.8 5.3 3.0 5.3 3.3 10.3
BPO -23.7 40.4 3.0 2.3 0.4 -19.5
Source: Company, ICICI Direct Research
Growth in EMEA due to growth in BFS, travel
verticals and Wishworks acquisition. Decline in
ROW was due to divestment of ESRI business
Insurance business improved due to material deal
win from large client. Softness in BFS client is
expected to continue
ICICI Securities | Retail Research 5
ICICI Direct Research
Result Update | NIIT Technologies
Exhibit 6: Client & human resource matrix es
Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20
Client metrics
Between 1 to 5 million 63 63 62 66 66 70
Between 5 to 10 million 14 18 20 16 17 16
Above 10 million 7 7 8 8 8 9
Headcount, Utilization, Attrition
Total Employees 9,764 10,025 10,144 10,263 10,297 10,800
Utilization 80.1 80.4 79 79.3 80.5 80.7
Attrition 10.1 10.8 11.7 12.2 12.9 12.3
Source: Company, ICICI Direct Research
Increase of four clients in $1-5 million category and
one client in above $10 million category
ICICI Securities | Retail Research 6
ICICI Direct Research
Result Update | NIIT Technologies
Financial story in charts
Exhibit 7: Digital contribution as percentage of overall revenue continues to inch up
18%19% 19%
21% 21%23%
25%26%
27%28%
29%30%
34%
38%
10.0%8.8%
-0.4%
18.9%
-0.6%
14.0%
11.0%8.9%
5.7%
9.2%
6.7% 5.8%
13.8%
20.0%
-2.0%
8.0%
18.0%
28.0%
38.0%
Q1FY17
Q2FY17
Q3FY17
Q4FY17
Q1FY18
Q2FY18
Q3FY18
Q4FY18
Q1FY19
Q2FY19
Q3FY19
Q4FY19
Q1FY20
Q2FY20
%
Digital as a % of revenue Growth, QoQ
Source: Company, ICICI Direct Research
Exhibit 8: Dollar revenues may grow at 11.6% CAGR in FY19-21E
388 411 416
464
124 131 135 138
528
139149
592
658
1.1
6.0
1.3
11.3
13.114.1
15.6
12.913.9
11.4
13.6
12.111.1
0
5
10
15
20
0
100
200
300
400
500
600
700
FY15
FY16
FY17
FY18
Q1FY19
Q2FY19
Q3FY19
Q4FY19
FY19
Q1FY20
Q2FY20
FY20E
FY21E
%$ million
Dollar revenue Growth, YoY
Source: Company, ICICI Direct Research
Exhibit 9: Change in margin estimates for FY20E and FY21E
14.6
17.3 17.316.8
15.8
18.018.6
17.6 17.6
14.4
18.317.7 18.0
10
13
16
19
22
FY15
FY16
FY17
FY18
Q1FY19
Q2FY19
Q3FY19
Q4FY19
FY19
Q1FY20
Q2FY20
FY20E
FY21E
%
EBITDA margin
Source: Company, ICICI Direct Research
ICICI Securities | Retail Research 7
ICICI Direct Research
Result Update | NIIT Technologies
Exhibit 10: PAT trend
194
264 250280
86112 100 106
403
88120
452
511
0
100
200
300
400
500
600FY15
FY16
FY17
FY18
Q1FY19
Q2FY19
Q3FY19
Q4FY19
FY19
Q1FY20
Q2FY20
FY20E
FY21E
| crore
PAT
Source: Company, ICICI Direct Research
Exhibit 11: One year forward rolling PE
0
200
400
600
800
1000
1200
1400
Price 15 12 9 6 3
Source: Company, ICICI Direct Research
Exhibit 12: Valuation
Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE
(| cr) (%) (|) (%) (x) (x) (%) (%)
FY17 2,802 4.5 40.8 (5.7) 35.9 17.0 14.8 18.7
FY18 2,991 6.8 45.6 11.9 32.3 16.3 15.8 19.4
FY19 3,676 22.9 65.7 43.9 22.1 12.4 19.5 25.2
FY20E 4,167 13.4 73.6 12.0 20.3 10.6 19.2 23.5
FY21E 4,670 12.1 83.2 13.1 17.7 9.2 19.2 23.8
Source: Company, ICICI Direct Research
ICICI Securities | Retail Research 8
ICICI Direct Research
Result Update | NIIT Technologies
Exhibit 13: Recommendation History vs. Consensus
0.0
20.0
40.0
60.0
80.0
100.0
100
400
700
1,000
1,300
1,600
1,900
Oct-
19
Sep-
19
Jul-
19
May-
19
Apr-
19
Feb-
19
Jan-
19
Nov-
18
Oct-
18
Aug-
18
Jun-
18
May-
18
Mar-
18
Feb-
18
Dec-
17
Nov-
17
Sep-
17
Aug-
17
Jun-
17
May-
17
Mar-
17
Jan-
17
Dec-
16
Oct-
16
Sep-
16
(%
)
(|)
Price Idirect target Consensus Target Mean % Consensus with BUY
Source: Bloomberg, Company, ICICI Direct Research
Exhibit 14: Top 10 Shareholders
Rank Name Latest Filing Date% O/S Position (m) Change (m)
1 Hulst (B V) 30-Sep-19 70.2% 43.8 21.9
2 Baring Private Equity Asia Ltd. 17-May-19 30.3% 18.9 18.9
3 HDFC Asset Management Co., Ltd. 30-Sep-19 4.7% 2.9 0.2
4 Matthews International Capital Management, L.L.C. 30-Jun-19 2.9% 1.8 0.8
5 Abu Dhabi Investment Authority 30-Jun-19 1.6% 1.0 1.0
6 Dimensional Fund Advisors, L.P. 31-Aug-19 1.6% 1.0 0.0
7 Polaris Capital Management, LLC 30-Jun-19 1.4% 0.9 0.0
8 AKM Systems Pvt. Ltd. 30-Jun-19 1.2% 0.8 0.0
9 Acadian Asset Management LLC 30-Jun-19 1.1% 0.7 0.0
10 Life Insurance Corporation of India 30-Jun-19 1.1% 0.7 0.0
Source: Reuters, ICICI Direct Research
Exhibit 15: Recent Activity
Investor name Value Shares Investor name Value Shares
Hulst (B V) 433.1m 21.9m Scantech Evaluation Services, Ltd. -272.2m -14.5m
Baring Private Equity Asia Ltd. 354.9m 18.9m Pawar (Rajendra Singh) -40.9m -2.2m
Abu Dhabi Investment Authority 19.5m 1.0m Thadani (Vijay K) -40.9m -2.2m
Matthews International Capital Management, L.L.C. 16.2m 0.8m Kotak Mahindra Asset Management Company Ltd. -5.9m -0.3m
Union Investment Luxembourg S.A. 10.9m 0.6m ICICI Prudential Asset Management Co. Ltd. -4.7m -0.2m
Buys Sells
Source: Reuters, ICICI Direct Research
Exhibit 16: Shareholding Pattern
(in %) Mar-19 Jun-19 Sep-19
Promoter 30.51 33.91 70.04
Public 69.49 66.09 29.96
Others 0.00 0.00 0.00
Total 100.00 100.00 100.00
Source: Company, ICICI Direct Research
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Result Update | NIIT Technologies
Financial summary
Exhibit 17: Profit and loss statement | crore
FY18 FY19 FY20E FY21E
Total operating Income 2,991 3,676 4,167 4,670
Growth (%) 6.8 22.9 13.4 12.1
COGS (employee expenses) 1,918 2,391 2,709 3,026
S,G&A expenses 572 640 721 803
Total Operating Expenditure 2,490 3,031 3,430 3,829
EBITDA 501 645 738 841
Growth (%) 3.4 28.7 14.3 14.0
Depreciation 127 125 175 196
Other Income 30 48 38 43
PBT 404 568 601 688
Total Tax 95 140 135 156
Adjusted 'PAT 280 403 452 511
Growth (%) 12 44 12 13
Adjusted EPS (|) 45.6 65.7 73.6 83.2
Exceptional loss - 6 (6) -
Reported PAT 280 398 457 511
Reported EPS (|) 45.6 65.7 73.6 83.2
Growth (%) 11.9 43.9 12.0 13.1
Source: Company, ICICI Direct Research
Exhibit 18: Cash flow statement | crore
FY18 FY19 FY20E FY21E
Profit before Tax 404 568 601 688
Add: Depreciation 127 125 175 196
(Inc)/dec in Current Assets (83) (24) (176) (235)
Inc/(dec) in CL and Provisions - - 66 82
Taxes paid (111) (118) (135) (156)
CF from operating activities 382 453 498 532
(Inc)/dec in Investments (561) (584) - -
(Inc)/dec in Fixed Assets (89) (70) (188) (233)
Others 6 12 38 43
CF from investing activities (270) (230) (149) (190)
Issue/(Buy back) of Equity 7 9 - -
Inc/(dec) in loan funds 1 (5) - -
Dividend paid & dividend tax (81) (109) (174) (197)
CF from financing activities (74) (106) (174) (197)
Net Cash flow 38 116 175 145
Exchange difference 17 (7) - -
Opening Cash 408 418 558 732
Closing Cash 418 558 732 877
Source: Company, ICICI Direct Research
Exhibit 19: Balance sheet | crore
(Year-end March) FY18 FY19 FY20E FY21E
Liabilities
Equity Capital 62 62 62 62
Reserve and Surplus 1,713 2,011 2,288 2,601
Total Shareholders funds 1,774 2,072 2,350 2,663
Total Debt 18 10 10 10
Provisions 74 73 73 73
Minority Interest / Other non CL 219 102 122 142
Total Liabilities 2,085 2,257 2,554 2,888
Assets
Net Block 636 574 586 624
Capital WIP 1 1 1 1
Total Fixed Assets 637 575 588 625
Goodwill 243 245 245 245
Deferred tax assets 123 103 103 103
Debtors 591 592 671 752
Other Current Assets 248 403 500 654
Cash 418 558 732 877
Current Investments 365 365 365 365
Total Current Assets 1,623 1,918 2,269 2,648
Trade payables 145 165 187 209
Other current liabities 369 419 458 514
Short term provisions 71 33 38 42
Total Current Liabilities 585 617 683 765
Net Current Assets 1,039 1,302 1,586 1,883
Application of Funds 2,085 2,257 2,554 2,888
Source: Company, ICICI Direct Research
Exhibit 20: Key ratios | crore
(Year-end March) FY18 FY19 FY20E FY21E
Per share data (|)
Adjusted EPS (Diluted) 45.6 65.7 73.6 83.2
DPS 15.0 - 24.3 27.4
Cash per Share 68.1 92.1 117.8 142.8
BV per share (Diluted) 288.9 342.3 377.9 433.7
Operating Ratios (%)
EBITDA Margin 16.8 17.6 17.7 18.0
PBT Margin 13.5 15.5 14.4 14.7
PAT Margin 9.4 11.0 10.8 10.9
Debtor days 72 59 59 59
Creditor days 18 16 16 16
Return Ratios (%)
RoE 15.8 19.5 19.2 19.2
RoCE 19.4 25.2 23.5 23.8
RoIC 28.7 39.0 38.7 39.2
Valuation Ratios (x)
P/E (Adjusted) 32.3 22.1 20.3 17.7
EV / EBITDA 16.3 12.4 10.6 9.2
EV / Net Sales 2.7 2.2 1.9 1.6
Market Cap / Sales 3.0 2.4 2.1 1.9
Price to Book Value 5.1 4.3 3.9 3.4
Solvency Ratios
Debt/EBITDA 0.0 0.0 0.0 0.0
Debt / Equity 0.0 0.0 0.0 0.0
Current Ratio 1.4 1.6 1.7 1.8
Quick Ratio 1.4 1.6 1.7 1.8
Source: Company, ICICI Direct Research
ICICI Securities | Retail Research 10
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Result Update | NIIT Technologies
Exhibit 21: ICICI Direct coverage universe (IT)
CMP M Cap
(|) TP(|) Rating (| Cr) FY19 FY20E FY21E FY19 FY20E FY21E FY19 FY20E FY21E FY19 FY20E FY21E FY19 FY20E FY21E
HCL Tech (HCLTEC) 1,120 1,200 Hold 151,850 74.7 76.6 85.3 15.0 14.6 13.1 10.4 9.3 7.9 26.9 25.2 24.6 24.5 21.3 20.6
Infosys (INFTEC) 642 855 Hold 343,388 35.4 39.1 44.8 22.3 20.2 17.6 15.2 13.6 11.7 32.9 32.4 34.3 23.7 24.2 25.6
MindTree (MINCON) 716 690 Hold 11,953 45.9 33.7 45.8 15.9 21.6 15.9 10.3 10.9 8.5 29.8 22.1 26.5 22.8 15.3 18.6
L&T Intotech (LTINFO) 1,662 1,870 Buy 27,985 87.3 86.2 101.0 18.5 18.7 16.0 13.7 12.8 10.6 40.4 33.5 33.1 31.0 25.7 25.4
NIIT Tech (NIITEC) 1,475 1,415 Hold 8,931 65.7 73.6 83.2 22.1 20.3 17.7 12.4 10.6 9.2 25.2 23.5 23.8 19.5 19.2 19.2
TCS (TCS) 2,069 2,005 Hold 739,500 83.8 86.2 95.5 23.4 22.8 20.6 17.7 16.6 14.8 43.8 42.6 43.9 34.4 33.4 34.4
Tech M (TECMAH) 727 850 Buy 65,381 47.7 45.8 51.7 15.2 15.8 14.1 9.1 9.1 7.9 23.6 21.1 21.2 21.2 17.9 17.8
Wipro (WIPRO) 249 300 Buy 150,558 14.9 17.2 20.5 16.7 14.5 12.2 10.2 9.9 7.9 17.8 18.7 20.0 15.8 18.0 19.1
RoE (%)
Sector / Company
EPS (|) P/E (x) EV/EBITDA (x) RoCE (%)
Source: Company, ICICI Direct Research
ICICI Securities | Retail Research 11
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Result Update | NIIT Technologies
RATING RATIONALE
ICICI Direct endeavors to provide objective opinions and recommendations. ICICI Direct assigns ratings to its
stocks according to their notional target price vs. current market price and then categorizes them as Buy, Hold,
Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined
as the analysts' valuation for a stock
Buy: >15%
Hold: -5% to 15%;
Reduce: -15% to -5%;
Sell: <-15%
Pankaj Pandey Head – Research [email protected]
ICICI Direct Research Desk,
ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
ICICI Securities | Retail Research 12
ICICI Direct Research
Result Update | NIIT Technologies
ANALYST CERTIFICATION
I/We, Devang Bhatt, PGDBM, Deepti Tayal, MBA, Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the
subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. It is also confirmed that above mentioned
Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months and do not serve as an officer, director or employee of the companies mentioned in the report.
Terms & conditions and other disclosures:
ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. ICICI Securities Limited is a Sebi registered
Research Analyst with SEBI Registration Number – INH000000990. ICICI Securities Limited Sebi Registration is INZ000183631 for stock broker. ICICI Securities is a subsidiary of ICICI Bank which is India’s largest private sector bank
and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. (“associates”), the details in respect of which are available on
www.icicibank.com
ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking and other business relationship
with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining a financial interest in the
securities or derivatives of any companies that the analysts cover.
Recommendation in reports based on technical and derivative analysis centre on studying charts of a stock's price movement, outstanding positions, trading volume etc as opposed to focusing on a company's fundamentals and, as
such, may not match with the recommendation in fundamental reports. Investors may visit icicidirect.com to view the Fundamental and Technical Research Reports.
Our proprietary trading and investment businesses may make investment decisions that are inconsistent with the recommendations expressed herein.
ICICI Securities Limited has two independent equity research groups: Institutional Research and Retail Research. This report has been prepared by the Retail Research. The views and opinions expressed in this document may or may
not match or may be contrary with the views, estimates, rating, target price of the Institutional Research.
The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and meant solely for the selected
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ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of managing or co-
managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction.
ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its associates or its analysts did not receive any compensation or other
benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts and their relatives have any material conflict of
interest at the time of publication of this report.
Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.
ICICI Securities or its subsidiaries collectively or Research Analysts or their relatives do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of
the research report.
Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject company/companies mentioned in this
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ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report.
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