MOSL: NIIT TECHNOLOGIES (Neutral)-Healthy momentum-uptrend in deal wins continue
NIIT TECHNOLOGIES: Healthy momentum; uptrend in deal wins continue
(NITEC IN, Mkt Cap USD1.1b, CMP INR1227, TP INR1400, 14% Upside, Neutral)
- Broad-based strength intact…: 3QFY19 USD revenues grew 16% YoY to USD135m (in line), EBITDA grew 39% YoY to INR1,805m (estimate of 37% growth) and PAT grew 32% YoY to INR1,002m (estimate of 46% growth). Constant currency (CC) revenue growth was 4.2% QoQ (in line). EBITDA margin expanded 60bp QoQ to 18.3%, marginally above our estimate of 30bp. PAT miss was mainly due to higher impact from forex and higher tax rate emanating from dividend paid by a subsidiary. NITEC's 9MFY19 CC revenue / EBITDA / PAT are up 15% / 32% / 53%.
- …led by Insurance vertical: Growth was driven by Insurance (+10.8% QoQ) and Travel (+7.1% QoQ), and BFS was only relatively slower (+3.1% QoQ). Digital grew by 7% QoQ and 34% YoY, and now contributes 29% to total revenue.
- Uptrend in deal wins continue: Order intake was at USD165m, taking the 12-month executable order book to USD375m. This was the sixth consecutive quarter of improvement in deal wins QoQ. In line with the recent trend, the US dominated deal wins during the quarter, with USD96m TCV. LTM book-to-bill inched up further to 1.21 from 1.19 in the previous quarter. Thus, revenue growth of mid-to-high teens appears doable, given the traction in deals. NITEC expects to sign at least two large deals every quarter.
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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