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NIIT Ltd.: Environmental uncertainties hurt business - Views on News from Equitymaster
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  • May 14, 2012 - NIIT Ltd.: Environmental uncertainties hurt business

NIIT Ltd.: Environmental uncertainties hurt business
May 14, 2012

NIIT Limited has announced the fourth quarter results of financial year 2011-2012 (4QFY12). The company has reported a 5.7% YoY decline in sales and a 30.7% YoY decline in net profits. It should be noted that the results are not exactly comparable to the same period last year. 4QFY12 as well as FY12 do not have the numbers from Element K as the company divested this business in October 2011. Here is our analysis of the results.

Performance summary
  • Consolidated net sales declined by 5.7% year-on-year (YoY) during 4QFY12. However, on a like to like basis (excluding the business of Element K, exceptional items & pass through revenues) from both 4QFY11 as well as 4QFY12), consolidated net sales grew by 17.0% YoY during the quarter. For the year ended March 2012 (FY12), sales grew by 1.0% YoY. On like to like basis, sales grew by 15% YoY during FY12.
  • Operating margins declined by 0.8% 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 FY12, margins at operating level were down by 1.1% YoY to 11.7% as compared to 12.8% in the same period last year.
  • On the back of decline in net sales, margins at operating levels as well as lower other income, net profits declined by 30.7% YoY during the quarter. However, for FY12, net income increased by 19.5% YoY. This was largely due to higher other income which resulted on account of gains from the divestment of the Element K business during the year.
  • The total headcount reduced by 172 to 3,727 during the quarter, largely due to decline in Sales & Marketing strength. On a continuing business basis, there was a net increase of 82 employees during FY12.
  • Recommends a final dividend of Rs 1.5 per share (yield of 3.9%).

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