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NIIT Ltd

NIIT Ltd - Results Update.

NIIT Revenues rise by about 10% YoY . Revenues rose by 10% YoY and came in marginally below street stimates. The individual learning business (ILS) and corporate learning business (CLS) led the overall growth with 15% and 11% gains, respectively. However, on a QoQ basis, CLS revenues remained almost flat, despite the rupee depreciation. Schools business also grew by 17% YoY. New businesses like IFB, Imperia, Uniqua, etc disappointed.

Future prospects

The individual learning business is expected to witness a slowdown in growth rates in FY10 to about 16%. New initiatives are expected to gather steam over the quarters with higher acceptance of the courses. However, incremental growth is expected to be muted.
Corporate learning businessis expected to grow at 8%. This may prove to be optimistic in the back drop of further deterioration in the US economy and scale up issues faced by the company.
Margins to improve (YoY basis) on the back of better capacity utilization, higher volumes and better leverage on costs.

Valuations

Concerns.
A prolonged recession in major global economies could impact revenue growth of NIIT.
Steep rupee appreciation v/s major global currencies may impact the financials of NIIT.
Hence investors can accumulate NIIT on declines, with a price target of Rs.60.