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NIIT Ltd.: Weak hiring sentiment hurts business
Jan 24, 2012

NIIT Limited has announced the third quarter results of financial year 2011-2012 (3QFY12). The company has reported a 16.8% YoY decline in sales and a whopping 215.5% YoY growth in net profits. It should be noted that the results are not exactly comparable to the same period last year. 3QFY12 includes the numbers from Element K only for 13 days during the quarter as the company divested from this business in October 2011. Here is our analysis of the results.

Performance summary
  • Consolidated net sales declined by 16.8% year-on-year (YoY) during 3QFY12. However, on a continuing business basis (excluding the business of Element K from both 3QFY11 as well as 3QFY12), consolidated net sales grew by 15.0% YoY. For the nine months ended December 2011 (9MFY12), sales grew by 3.3% YoY.
  • Operating margins declined by 2.3% YoY during the quarter, largely due to expenses related to the cloud campus as well as pre-operative expenses on new business segment 'skill building solutions'. For 9MFY12, margins at operating level were down by 1.2% YoY to 11.7% as compared to 12.9% in the same period last year.
  • Despite decline in net sales as well as margins at operating levels, net profits grew by whopping 215.5% YoY. This was largely due to higher other income which resulted on account of the gains from the divestment of the Element K business during the quarter. For 9MFY12, net income increased by 54.6% YoY.
  • The total headcount reduced by 668 to 3,899 during the quarter, largely due to divestment of the Element K business. However, also on a continuing business basis, there was a net reduction of 72 employees during the quarter.

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