ICICI Direct recommended is bullish on NIIT Technologies has recommended buy rating on the stock with a target price of Rs 1415 in its research report dated January 21, 2019.
ICICI Direct's research report on NIIT Technologies
NIIT Technologies reported a strong set of Q3FY19 numbers. Constant currency revenue grew at 4.2% QoQ. US$ revenues grew 3.0% QoQ to $134.9 million, above our expectation of 2.0% and $133.5 million mainly led by healthy growth in insurance (6.6% QoQ) and others vertical (6.7% QoQ) Rupee revenues increased 7.1% QoQ to Rs 971.7 crore (above our estimate of Rs 962 crore) EBITDA margins expanded 60 bps QoQ to 18.6% (vs. above our estimate of 18.3%) mainly led by 40 bps improvement in gross margin and SG&A rationalisation Order intake grew 3% QoQ to $165 million. The company won two large deals of $20 million+ in BFS and in insurance segment.
Outlook
NIIT Tech reported a strong quarter and maintained its positive growth outlook for the coming period. Further, digital revenue trajectory, improved deal wins and healthy commentary across industry verticals is expected to drive growth, going ahead. Hence, we expect rupee revenue & PAT to grow at a CAGR 15% & 23%, respectively, in FY18-21E with EBITDA margin expansion to 18% in FY21E. Consequently, we maintain our BUY rating with a revised target price of Rs 1,415 per share (P/E of 16.5x on FY21E EPS).
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