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8/9/2019 NIIT Ltd Dec 09 Results Updated Detailed Report
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NIIT Ltd
HOLD Target Price: Rs.76.00CMP: Rs.66.20 Market Cap.: Rs.10929.62mn.
Date: March 04, 2010
Key Ratios:Particulars FY09 FY10E FY11E
OPM (%) 22 18 19
NPM (%) 9 3 7
ROE (%) 12 5 8
ROCE (%) 27 27 30
P/BV(x) 2.84 2.69 2.48
P/E(x) 23.14 50.45 31.11
EV/EBDITA(x) 9.11 9.79 8.06
Debt Equity Ratio 0.52 0.51 0.50
Key Data:
Sector Education Sector
Face Value Rs.2.00
52 wk. High/Low (Rs.) 79.05
Volume (2 wk. Avg.) 358000
BSE Code 500304
SYNOPSIS
NIIT Limited provides information technology (IT)learning solutions for individuals, enterprises,
schools, and colleges in India and internationally.
NIIT Imperia and Management DevelopmentInstitute (MDI), Gurgaon have entered into
Memorandum of Understanding (MoU) to offer
executive management programs to working
professionals.
NIIT Ltd has granted the stock option to the eligibleemployees of the Company. Number of Options
granted is 543,720 Options.
Net sales and Operating profit of the company areexpected to grow at a CAGR of 15% and 15% over
2008 to 2011E respectively.
Share Holding Pattern:
V.S.R. Sastry
Vice President
Equity Research Desk
91-22-25276077
Dr. V.V.L.N. Sastry Ph.D.Chief Research Officer
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Table of Content
Investment Highlights ............................................................................................................ 3
Company Profile.5
Peer Group comparison...7
Keyconcern.7
Financials.8
Charts...10
Outlook and conclusions....12
Industry Overview...... ..13
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Investment Highlights
Q3 FY10 Results Update
NIIT Ltd. reported Standalone net profit rose Rs.11.50 million for the third quarter ended
December 31, 2009, against loss Rs.3.40 million in the same period previous fiscal. Net
sales for the quarter are increased by 18.25% to Rs.1458.70 million from Rs.1233.60
million for the same quarter last year. Total revenue rose to Rs.1507.2 million for the
quarter ended December 31, against Rs.1273.1 million in the same period previous fiscal.
EPS of the company is registered at Rs.0.07 for the quarter ended December 2009.
Quarterly Results - Standalone (Rs in mn)
As At Dec-09 Dec-08 %change
Net sales 1458.70 1233.60 18.25
Net profit 11.50 (3.40) -
Basic EPS 0.07 (0.02) -
Grant options
NIIT Ltd has granted the stock option to the eligible employees of the Company. Number
of Options granted is 543,720 Options (each option is equal to one equity share of Rs. 2
each) with a Price of Rs. 69.20 and time based vesting - 1/3rd Options will vest each year
(All options will vest in three years).
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NIIT - MDI & NIIT Imperia sign MoU to deliver Executive Management Programs
NIIT Imperia and Management Development Institute (MDI), Gurgaon have entered into
Memorandum of Understanding (MoU) to offer executive management programs to
working professionals. The unique basket of programmes, designed to deliver high-quality
management education to mid and senior level working professionals will be launched in
April 2010. The range and mix of programmes, particularly in the areas of General
Management and Strategy, leverage MDIs academic competences and NIIT Imperia's
superior delivery platform -- Synchronous Learning Technology -- to deliver education
through the interactive, virtual classroom format. These programmes will be conducted
simultaneously across 19 cities through NIIT Imperia Centres.
Signs an agreement with SENA
NIIT, leading Global Talent Development Corporation and Asias largest IT trainer, and
Servicio Nacional de Aprendizaje (SENA), Colombias leading technical education institute,
have signed an International Cooperation General Agreement to provide IT, ITeS and
English and Professional Life Skills training to the people of Colombia.
Objective of agreement are as follows:
To Establish the framework to develop international cooperation
To Contribute to the promotion and development of human talent for Colombia
To Establish a strategic long term knowledge alliance this creates and promotes
development of technology transfer.
Enters into Strategic Alliance
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SAP India and NIIT, the leading global talent development corporation and Asias largest IT
trainer has entered into a strategic alliance to offer training to future SAP consultants in
world leading business software, Enterprise Resources Planning and related application
provided by SAP. Both organsiation believe in enhancing Indias talent base to help India
enterprises transform and become more competitive at home and aboard
Break up of Expenditure
Company Profile
NIIT is a leading Global Talent Development Corporation, building a skilled manpower pool for
global industry requirements. The company which was set up in 1981, to help the nascent IT
industry overcome its human resource challenges, has today grown to rank among the worlds
leading talent development organisations offering learning solutions to Individuals, Enterprises
and Institutions across 40 countries.
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NIITs training solutions in IT, Business Process Outsourcing, Banking, Finance and Insurance,
Executive Management Education, and Communication and Professional Life Skills, touch five
million learners every year. NIITs expertise in learning content development, training delivery
and education process management make us the most preferred training partner, worldwide.
Research-based Innovation, a key driver at NIIT, has enabled us to develop programmes and
curricula that use cutting-edge instructional design methodologies and training delivery. NIITs
Individual Learning Solutions include industry-endorsed IT training programmes like GNIIT,
Integrated programmes for Engineers (NIIT Edgeineers) and Infrastructure Management
programmes (NIIT GlobalNet+).
Services
Operations
Publishing
Technology
Retail
Others
Industry Solutions
The following are theIndustry Solutions Units where NIIT LTD is working;
Learning BPO
Content Development
Off-the Shelf Courses
Technology Enablement
Training Administration
Solutions
Training Delivery
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Advisory Services
Process and Rollout Training
IT Training
Peer Group Comparison
Name of the company CMP (Rs.)
Market
Cap.(Rs.mn.) EPS(Rs.) P/E(x) P/Bv(x) Dividend(%)
NIIT Ltd 66.20 10929.62 1.96 33.62 2.83 65.00
Educomp Solution 700.30 66282.8 21.68 32.28 17.23 25.00
Everonn system 401.50 6040.6 21.64 18.46 2.91 0.00
APTECH 171.90 7994.3 18.58 9.24 3.19 0.00
Key Concerns
Currency Fluctuations related risks
Commoditization of offerings/value proposition
Gross margin deterioration risk
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Financials Results
12 Months Ended Profit & Loss Account (Standalone)
Value(Rs.in.mn) FY08 FY09 FY10E FY11E
Description 12m 12m 12m 12m
Net Sales 4673.80 5456.20 6351.97 7241.25
Other Income 343.50 416.70 212.85 234.14
Total Income 5017.30 5872.90 6564.82 7475.38
Expenditure -4127.70 -4673.60 -5448.06 -6118.85
Operating Profit 889.60 1199.30 1116.76 1356.53
Interest -100.10 -161.70 -257.88 -283.66
Gross profit 789.50 1037.60 858.89 1072.86
Deprecation -358.20 -402.40 -543.68 -598.05
Profit Before Tax 431.30 635.20 315.21 474.82
Tax -103.60 -163.10 -98.57 -123.45
Profit After Tax 327.70 472.10 216.64 351.36
Equity capital 329.40 330.00 330.20 330.20
Reserves 3303.40 3517.40 3734.04 4085.40
Face value (Rs.) 2.00 2.00 2.00 2.00
EPS 1.99 2.86 1.31 2.13
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Quarterly Ended Profit & Loss Account (Standalone)
Value(Rs.in.mn) 30-Jun-09 30-Sep-09 31-Dec-09 31-Mar-10E
Description 3m 3m 3m 3m
Net sales 1239.20 2049.50 1458.70 1604.57
Other income 52.70 58.30 48.50 53.35
Total Income 1291.90 2107.80 1507.20 1657.92
Expenditure -1081.80 -1796.00 -1286.60 -1283.66
Operating profit 210.10 311.80 220.60 374.26
Interest -62.00 -66.50 -62.20 -67.18
Gross profit 148.10 245.30 158.40 307.09
Deprecation -132.40 -137.40 -133.60 -140.28
Profit Before Tax 15.70 107.90 24.80 166.81
Tax -13.60 -28.30 -13.30 -43.37
Profit After Tax 2.10 79.60 11.50 123.44
Equity capital 330.00 330.20 330.20 330.20
Face value (Rs.) 2.00 2.00 2.00 2.00
EPS 0.01 0.48 0.07 0.75
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Charts:
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1 Year Comparative Graph
Outlook and Conclusion
At the current market price of Rs.66.20, the stock is trading at 50.45 x FY10E and 31.11 x
FY11E respectively.
Price to Book Value of the stock is expected to be at 2.69 x and 2.48 x respectively for
FY10E and FY11E.
Earning per share (EPS) of the company for the earnings for FY10E and FY11E is seen at
Rs.1.31 and Rs.2.13 respectively.
Net Sales and Operating profit of the company are expected to grow at a CAGR of 15%
and 15% over 2008 to 2011E respectively.
On the basis of EV/EBITDA, the stock trades at 9.79 x for FY10E and 8.06 x for FY11E.
We recommend HOLD in this particular scrip with a target price of Rs.76 .00 for
Medium to Long term investment.
NIIT Ltd BSE SENSEX
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Industry Overview
Education Sector
Education forms the backbone of a nation and is one of the most important key indicators of a
country's growth and development. Infact, the rise of knowledge economy at a global level has
once again reinforced education, in all its forms (elementary, secondary, higher, vocational, and
adult), as the key economic and business driver.
In the past, government was the sole education provider as it was primarily considered a social
service. However, with liberalization and globalization of economy, it has become evident in the
last decade or so that government alone cannot bear the cost of the education sector. While
the private sector has stepped in to fill the gap and has increasingly enhanced its profile in
education over the last decade, its role is still not properly defined
This has led to a growing debate in recent times on India's Education Policy and the changes
required to make the education sector more vibrant and flexible to meet the rapidly
diversifying needs of our growing economy. To catalyse the desired changes in India's Education
policy, FICCI has constituted a Committee on Education.
Scope of the Sector
The Indian education industry is in its development stage. With economic growth and enhanced
technology it has become necessary to develop the structure of the Indian education sector.
Funds are a major concern in the market though government has taken many initiatives for the
development of education infrastructure which can be fulfilled by private players. The
government has opened the doors for foreign universities which will help in shaping the
education industry structure.
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The numbers of junior basic schools are highest in the country and there is a strong need to set
up higher secondary schools as well as colleges with a focus on IT education. Government has
set up many ICT schools but still more than fifty percent of the market is untapped which shows
an opportunity for private players. In respect to the countrys population and number of
students, trained teachers ratio is low which emphasizes the need of training institutes. The
growing IT industry in India is driving IT education and training market as well as enhanced
teaching techniques.
Growth prospects
The Indian Education sector is growing stage with wide market size. From 1991 it has became a
well established distribution network with the intense competition which are listed under BSE,
NSE and also some the not listed even it is generating in providing quality education under
different segment . Indian government specially allocated reserve in 11th
five year plan. In1991
250 bn it has raised to 1250 bn in 2006 it shows a enormous growth. Education sector is
expected to grow by over 70%by 2012.under this developing institution like Higher education,
coaching institution, distance education, E-learning, online demonstration and many more. For
education many of the donation and also provide service institution like CIFTI, SEDF, AIOE.ICA,
ICC India which help in education.
The report highlights opportunities prevailing in the Indian education industry. It focuses on
market size of all the segments like schools, colleges, other institutes and ICT schools. The
number of professional colleges highlights the need of new teaching techniques and bright
future of vocational training market. Scope of foreign universities is a part of the report and it
also gives an overview of issues in regard to the foreign universities entering in India.
Competitive landscape is also a part of the report which tells the level of competition and major
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players in the market. The report profiles major players with focus on key strategies adopted by
them.
Indian competitiveness and comparison with the world markets
This section compares the major competitors in the industry. The Competitors At-a-Glance is
aimed at giving an overview of the competitive landscape in the industry.
Players are Educomp, NIIT, Everonn, CompuCom and JETKING
________________ ____ ________________________
Disclaimer:
This document prepared by our research analysts does not constitute an offer or solicitation
for the purchase or sale of any financial instrument or as an official confirmation of any
transaction. The information contained herein is from publicly available data or other
sources believed to be reliable but do not represent that it is accurate or complete and it
should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of its
affiliates shall not be in any way responsible for any loss or damage that may arise to any
person from any inadvertent error in the information contained in this report. This document
is provide for assistance only and is not intended to be and must not alone be taken as thebasis for an investment decision.
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Firstcall India Equity Research: Email [email protected]
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