Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Computer training: Choose the best - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Oct 6, 2000

    Computer training: Choose the best

    The education and training (E&T) market in India is growing at a break neck speed. Increasing competition in the market, both from international companies and unorganised players is squeezing the margins of the larger players in the sector.

    The E&T industry is now maturing with schools, colleges and universities beginning to offer computer education. This was a lacuna in the education system, which career training institutes like Aptech, SSI and NIIT sought to fill. Also, with small institutes cropping up all over the country, the competition has been fierce, as growth rates flattering to 20-25%.

    As can be seen from the table below, SSI has witnessed a higher growth in the quarter ended June 2000 compared to its near competitors Aptech and NIIT. SSI has a strong presence in the education business through its division SSI Education, which accounts for around 75% of its total revenues. It offers courses in high-end technologies including Java, e-commerce and client server technologies. Recently the company has acquired AlbionOrion, the company operating in high end IT solutions. This will further facilitate SSI to maintain its growth rate in future. On the other hand Aptech and NIIT are operating on a comparatively higher base than SSI which has slowed down the growth rate of both these companies. Also concentration on low ended software solution business has resulted in slow growth rate in their profits.

    Comparative financial performance
    Quarter ended June 30 SSI Change NIIT Change Aptech Change
    Sales 675 150.4% 2,019 33.9% 1,389 36.4%
    Total Income 830 199.5% 2,020 32.9% 1,390 36.4%
    Operating profit 431 285.2% 875 26.1% 518 54.0%
    Interest 18 -10.5% (22) 20.4% 9 210.1%
    PBDT 414 349.5% 897 25.9% 509 52.7%
    Depreciation 37 47.8% 88 13.4% 84 87.8%
    Tax 37 330.2% 29 16.0% 55 77.4%
    Profit after tax 309 432.0% 780 27.9% 371 43.6%
    No. of shares (m) 12.8 38.7 25.0
    *Change compared to corresponding quarter in the previous year

    Responding to the transition in the education industry, NIIT has aggressively web enabled its entire education curriculum in the last six months. It has moved up the value chain by executing several e-consulting and e-strategy assignments for its customers. Software solutions now account for 60% of its business, which has resulted in its higher profits margins compared to its peers.

    Key Ratios
    Particulars SSI NIIT Aptech
    Operating profit margin 41.0% 43.3% 37.2%
    Net profit margin 37.3% 38.6% 26.7%
    Cash EPS (Rs) 108.2 89.9 72.9
    EPS (Rs) 96.5 80.7 59.4

    SSIís stock is accorded a premium valuation in the market due to its higher growth rate and aggressive strategies. It has an established track record of making acquisitions that create significant value for the shareholders. NIIT and Aptech trade at a significant discount to SSI due to their slow topline growth. The key valuation driver for both NIIT and Aptech is likely to be their software services business, which is showing encouraging growth. Also eyeing inorganic growth will help them to improve their returns on capital employed through efficient deployment of cash.

    Comparative Valuations
    Particulars SSI NIIT Aptech
    Market price (Rs) 2,390 1,421 462
    P/E (x) 24.8 17.6 7.8
    Market cap / sales (x) 15.5 7.7 2.4
    * Based on June quarter annualised earnings



    Equitymaster requests your view! Post a comment on "Computer training: Choose the best". Click here!


    More Views on News

    Tech Mahindra: Our Revised View (Quarterly Results Update - Detailed)

    Aug 2, 2017

    A better than expected turnaround in performance results in a change in view.

    Wipro: A Decent Start to the Year (Quarterly Results Update - Detailed)

    Jul 27, 2017

    Digital services drive growth for Wipro in 1QFY18.

    Infosys: A Decent Start to FY18 (Quarterly Results Update - Detailed)

    Jul 14, 2017

    Infosys starts FY18 on an encouraging note with a stable performance.

    TCS: Currency Volatility Plays Spoilsport (Quarterly Results Update - Detailed)

    Jul 14, 2017

    TCS starts FY18 decently despite an adverse currency impact.

    HCL Tech: Ends FY17 on Expected Lines (Quarterly Results Update - Detailed)

    Jun 29, 2017

    Volvo partnership caps a good year for HCL Technologies.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 18, 2017 03:37 PM


    • Track your investment in PVP VENTURES with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks