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SHARETIPSINFO >>Research Reports >> NIIT LIMITED (05-06-2009)
LISTING |
|
|
Rs 62.5 |
|
Rs 116/Rs14 |
|
Rs 2 |
P/BV |
0.35 |
PE |
27 |
DIV YIELD |
2.1% |
COMPANY OVERVIEW:
The company was incorporated in the year 1981, under the name of Pace Education Private Limited. The company was promoted by S.S. Nadar, V.K.Thandani, R.S.Pawar and Kiran Nadar. The company began its operation by developing, marketing and implementing technical know-how packages for Education/Training, Consultancy and data processing in the field of information technology.
On 16th November, 1990 the company name was changed to NIIT Limited.
NIIT is provides learning and knowledge solution in more than 30 countries. It is among the top 20 global players IT training players.
FOCUS AREA:
NIIT is focusing on (a) targeting the employability issue by extending skill development and training beyond IT and BFSI, Retail, ITES and General Communication.(b) ICT projects due to prevailing huge opportunities.(c) targeting private school.(d) providing custom development projects in corporate learning solution.
RECENT DEVELOPMENT:
NIIT has inked a deal with the department of education, Government of Gujarat to introduce computer aided learning in 1870 high and higher secondary government schools for classes 9 to 12 in Gujarat.
The five year contract valued at Rs 843.81 million, would impact around 900,000 school students across Gujarat.
NIIT also has 1672 school in the state of Rajasthan.
NIIT recently bagged the single largest turnkey IT education contract in the school segment in India of 2005 schools from the Government of Andhra Pradesh.
NIIT also has under its fold 900 school from Bihar Government.
NDMC has entered into contract for 29 schools with NIIT.
DIVIDEND TRACK RECORD:
YEAR |
DIVIDEND |
2004 |
50% |
2005 |
55% |
2006 |
60% |
2007 |
65% |
2008 |
65% |
PRODUCT MIX:
PRODUCT NAME |
SALES(in crore) |
PRODUCT MIX |
Software Packages(Courseware) |
Rs220.5 |
47.17% |
Rental &Service Charges |
Rs216.33 |
46.28% |
Software Packages |
Rs16.92 |
3.61% |
Technical Material |
Rs13.64 |
2.91% |
INVESTMENT RATIONAL:
Bagged several state government projects.
Education sector is showing hyper growth and company is in right position to exploit the opportunity thrown at it.
Government increasing budgetary allocation towards education will provide good opportunity for the company.
Declining interest rate will help NIIT to tie up its interest outgo.
Good dividend paying track record. The dividend yield is 2.1%.
SHAREHOLDING PATTERN:
|
|
NO. OF SHARES |
% OF TOTAL |
PROMOTER |
56161367 |
|
34.04% |
|
INSTITUTION |
53289878 |
|
32.30% |
|
GENERAL PUBLIC |
55531741 |
|
33.66% |
|
GRAND TOTAL |
164982986 |
|
100% |
|
Key Highlights:
Promoter has increased their stake in past six months from 31.18% to 34.04%.
FINANCIAL:
|
|
31/03/06 |
31/03/07 |
31/03/08 |
31/03/09 |
TOTAL INCOME |
346.93 |
405.15 |
501.73 |
1174.22 |
EXPENDITURE |
-289.65 |
-333.39 |
-412.77 |
-1035.92 |
OPERATING INCOME |
57.28 |
71.76 |
88.96 |
138.3 |
DEPRECIATION |
-23.76 |
-31.4 |
-35.82 |
-64.68 |
PBIT |
|
33.52 |
40.36 |
53.14 |
73.62 |
INTEREST |
|
-5.58 |
-8.43 |
-10.01 |
-24.3 |
PBT |
|
27.94 |
31.93 |
43.13 |
49.32 |
TAX |
|
-1.89 |
-0.31 |
-10.36 |
-10.38 |
PAT |
|
26.05 |
31.62 |
32.77 |
38.94 |
CHANGE IN TOTAL INCOME: CAGR IN TOTAL INCOME IS 50.14%.
CHANGE IN OPERATING INCOME: CAGR IN OPERATING INCOME IS 34.15%.
CHANGE IN NET PROFIT: CAGR IN NET PROFIT IS 14.33%.
RATIOS:
|
|
31/03/06 |
31/03/07 |
31/03/08 |
31/03/09 |
EPS |
|
1.797792 |
1.917526 |
1.987265 |
2.361431 |
OPM |
|
16.51054 |
17.71196 |
17.73065 |
11.77803 |
NPM |
|
7.508719 |
7.804517 |
6.531401 |
3.316244 |
INTEREST COVER |
6.007168 |
4.787663 |
5.308691 |
3.02963 |
Key Highlights:
EPS increased from Rs1.79 in FY2006 to Rs2.36 in FY2009.
OPM reamined almost flat at 16% till FY2008 but abrupt decline is seen in FY2009 to 11.7%. Higher operating expenses could be the reason for the sudden dip.
NPM too remained flat at 6% till FY2008 but it declined to 3% in FY2009. Higher interest outgo coupled by higher operating cost is the reason for decline.
Interest cover remained above 5 till FY2008 but increase in interest outgo made the cover slide to 3.
Key Highlights:
Total Income declined for the quarter by 10.3%.
Operating Income increased by 156.12% due to decrease in operating expenses.
Net Profit up by only 16.21% due to 14 fold jump in interest outgo.
VALUATION AND OUTLOOK:
The outlook of the company remains very bright as it has successfully restructured itself into as education company. As the company has bagged project from various state govt and it is also foraying into different stream of education that is job oriented will see its profitability multiplying.
We expect FY2010E EPS to Rs6 per share. So at cmpRs62 the stock is trading at 10.3x to FY2010E earning. We value the company at 17x , this gives the fair price of Rs102.
CONCLUSION:
We feel the company is in right position to exploit the growing education industry in India. Investor with 6-8 month target could start accumulating stock at current level.
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