MOSL: NIIT TECHNOLOGIES (Neutral)-Beat despite client ramp-down…guidance of double-digit growth for FY19
NIIT Technologies: Beat despite client ramp-down…guidance of double-digit growth for FY19
(NITEC IN, Mkt Cap USD0.7b, CMP INR728, TP INR800, 10% Upside, Neutral)
- Revenue beat amid healthy Digital growth…: NITEC’s 3QFY18 revenue adjusted for forex gains grew 2.1% QoQ (est. of +0.7%), despite seasonal weakness and ramp-down of Morris. Except the customer-specific issue, which impacted the Manufacturing vertical, strength was seen in both BFSI (4% QoQ) and Transport (4.4% QoQ). Contribution from the Digital segment increased to 25% of overall business, having grown by 11% QoQ.
- …which also supported margins: GPM of 36.4% (+140bp QoQ), SGA of 19.3% (+40bp) led to EBITDA margin of 17.1% (+100bp). Margin expansion was a function of growth in Digital and NITL. PAT stood at INR757m, higher than our estimate of INR677m, led by the operational beat and lower ETR, which was due to a one-time tax benefit.
- Double-digit growth in FY19: Consistent USD100m+ deal wins since 2HFY16, 12-month executable order book increasing to USD320m after having stagnated at ~USD300m, and a robust pipeline have all led to an optimistic outlook for 4Q and beyond. Double-digit growth with margin expansion is expected in FY19, despite further ramp-down in Morris.
NIIT Technologies Ltd is an India-based Information technology (IT) solutions company. The Company is engaged in application development and maintenance, managed services, cloud computing and business process outsourcing to organizations in several sectors such as banking and financial services, insurance, travel and transportation and logistics, manufacturing and distribution and government. The Company is combined with capabilities in data and analytics, automation, cloud and digital, is enabling to drive business transformation. The Company offers Tron intelligent automation, digital process transformation, application services, business process services, cyber security, among others. It serves industries such as travel and transportation, insurance, banking and financial services and enterprise services.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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