Nov 21, 2000|
NIIT – Vision 2006
NIIT pioneered IT training more than 18 years ago and today trains over 200,000 students in 1,753 centres spread across 25 countries worldwide. The company employs over 4,000 people operating through wholly owned subsidiaries in the US, Europe, Asia Pacific, Greater China, Japan and India. It enjoys a market share of 40% in IT training with a world-renowned brand.
NIIT has targeted to become Rs 100 bn company by 2006. The company plans to achieve this target by its ‘FastForward’ plan, which envisages independent business units (IBU) and a corporate structure within the company. Currently, the company has divided its business into four different IBUs – education & training, projects, software solutions and knowledge solutions. While software solutions comprise e business and client server, knowledge management, implies the setting up of call centres. Thus, NIIT has a respectable business model.
During the past six years the company’s revenues and profits have witnessed a compounded annual growth rate (CAGR) of 42% and 48% respectively. To achieve the target of Rs 100 bn in the next six years, NIIT will have to grow its topline by a CAGR of 54%. Keeping in mind the change in the business mix of the company (education & training comprise only 51% of the turnover currently from 60% in 1996) and increasing focus on the software solutions business (margins in this business are almost double that in the training business) the company should be able to achieve its target.
Changing business mix
|Year ended September 30
|Education & Training
|Software & Consultancy
|Software as a % of total
However, the company’s software solutions business is still at a lower value chainNIIT is moving up the software value chain by executing several e-consulting and e-strategy assignments for its customers. Revenues from e-business now contribute 36% of total revenues from software services business.
At the current market price of Rs 1,609 NIIT is trading at a P/E of 28 times its September 2000 earnings and 21 times our projected earnings for the next year. The company’s current valuations are well below its historic P/E of 45-55 times. In the coming years if the company is successfully able to move up the software value chain, its profits can grow at a CAGR of 50%. This could trigger a re-rating in the stock.
More Views on News
Aug 2, 2017
A better than expected turnaround in performance results in a change in view.
Jul 27, 2017
Digital services drive growth for Wipro in 1QFY18.
Jul 14, 2017
Infosys starts FY18 on an encouraging note with a stable performance.
Aug 5, 2017
How to get exclusive insider recommendations from Ankit Shah.
Jul 14, 2017
TCS starts FY18 decently despite an adverse currency impact.
More Views on News
Aug 17, 2017
A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.
Aug 10, 2017
Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.
Aug 16, 2017
The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?
Aug 10, 2017
Bitcoin hits an all-time high, is there more upside left?
Aug 16, 2017
Ensure your financial Independence, and pledge to start the journey towards financial freedom today!
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: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407