niit ltd dec 09 results updated detailed report

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

[email protected]

Dr. V.V.L.N. Sastry Ph.D.Chief Research Officer

[email protected]


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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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niit ltd dec 09 results updated detailed report

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