NIIT 2017-18 Annual Report Analysis

Sat, 31 Mar

NIIT has announced its results for the year ended March 2018. Let us have a look at the detailed performance review of the company during FY17-18.

NIIT Income Statement Analysis

• Operating income during the year rose 0.5% on a year-on-year (YoY) basis.
• The company's operating profit increased by 16.0% YoY during the fiscal. Operating profit margins witnessed a fall and down at 8.4% in FY18 as against 7.3% in FY17.
• Depreciation charges decreased by 12.2% and finance costs decreased by 21.3% YoY, respectively.
• Other income declined by 37.5% YoY.
• Net profit for the year declined by 85.9% YoY.
• Net profit margins during the year grew from 2.0% in FY17 to 0.3% in FY18.

NIIT Income Statement 2017-18

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Net Sales	Rs m	8,465	8,505	0.5%
Other income	Rs m	137	86	-37.5%
Total Revenues	Rs m	8,603	8,591	-0.1%
Gross profit	Rs m	614	713	16.0%
Depreciation	Rs m	457	401	-12.2%
Interest	Rs m	281	221	-21.3%
Profit before tax	Rs m	14	177	1,143.3%
Tax	Rs m	184	201	8.9%
Profit after tax	Rs m	-170	-24	-85.9%
Gross profit margin	%	7.3	8.4
Effective tax rate	%	1,297.1	113.6
Net profit margin	%	-2.0	-0.3

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NIIT Balance Sheet Analysis

• The company's current liabilities during FY18 stood at Rs 5 billion as compared to Rs 5 billion in FY17, thereby witnessing an increase of 6.1%.
• Long-term debt down at Rs 928 million as compared to Rs 2 billion during FY17, a fall of 40.3%.
• Current assets fell 10% and stood at Rs 5 billion, while fixed assets fell 4% and stood at Rs 9 billion in FY18.
• Overall, the total assets and liabilities for FY18 stood at Rs 14 billion as against Rs 15 billion during FY17, thereby witnessing a fall of 6%.

NIIT Balance Sheet as on March 2018

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*	% Change
Networth	Rs m	6,764	7,117	5.2
Current Liabilities	Rs m	4,720	5,007	6.1
Long-term Debt	Rs m	1,553	928	-40.3
Total Liabilities	Rs m	14,776	13,918	-5.8
Current assets	Rs m	5,291	4,769	-9.9
Fixed Assets	Rs m	9,486	9,149	-3.5
Total Assets	Rs m	14,776	13,918	-5.8

NIIT Cash Flow Statement Analysis

• NIIT's cash flow from operating activities (CFO) during FY18 stood at Rs 880 million on a YoY basis.
• Cash flow from investing activities (CFI) during FY18 stood at Rs -524 million, an improvement of 23.4% on a YoY basis.
• Cash flow from financial activities (CFF) during FY18 stood at Rs -210 million, an improvement of 52% on a YoY basis.
• Overall, net cash flows for the company during FY18 stood at Rs 42 million from the Rs 197 million net cash flows seen during FY17.

NIIT Cash Flow Statement 2017-18

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-17	Mar-18
Cash Flow from Operating Activities	Rs m	1,107	880	-20.4%
Cash Flow from Investing Activities	Rs m	-425	-524	-
Cash Flow from Financing Activities	Rs m	-433	-210	-
Net Cash Flow	Rs m	197	42	-78.6%

Current Valuations for NIIT

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs -0.1, an improvement from the EPS of Rs -1.0 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 99.7, stands at 259.5 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 1.9 times, while the price to sales ratio stands at 2.0 times.
• The company's price to cash flow (P/CF) ratio stood at 42.6 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*
Sales per share (Unadj.)	Rs	51.1	51.1
TTM Earnings per share	Rs	-1.0	-0.1
Diluted earnings per share	Rs	-1.3	-0.2
Price to Cash Flow	x	39.3	42.6
TTM P/E ratio	x	-201.6	259.5
Price / Book Value ratio	x	2.1	2.3
Market Cap	Rs m	14,487	16,060
Dividends per share (Unadj.)	Rs	0.0	0.0

Ratio Analysis for NIIT

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.0x during FY18, from 1.1x during FY17. The current ratio measures the company's ability to pay short-term and long-term obligations.

Interest Coverage Ratio: The company's interest coverage ratio improved and stood at 1.8x during FY18, from 1.1x during FY17. The interest coverage ratio of a company states how easily a company can pay its interest expense on outstanding debt. A higher ratio is preferable.

• Profitability Ratios

Return on Equity (ROE): The ROE for the company improved and stood at -0.3% during FY18, from -2.5% during FY18. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

Return on Capital Employed (ROCE): The ROCE for the company improved and stood at 4.9% during FY18, from 3.5% during FY17. The ROCE measures the ability of a firm to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

Return on Assets (ROA): The ROA of the company improved and stood at 1.4% during FY18, from 0.7% during FY17. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-17*	12 Mar-18*
Current ratio	x	1.1	1.0
Debtors’ Days	Days	73	71
Interest coverage	x	1.1	1.8
Debt to equity ratio	x	0.2	0.1
Return on assets	%	0.7	1.4
Return on equity	%	-2.5	-0.3
Return on capital employed	%	3.5	4.9

To see how NIIT has performed over the last 5 years, please visit here.

NIIT Share Price Performance

Over the last one year, NIIT share price has moved up from Rs 84.1 to Rs 99.7, registering a gain of Rs 15.6 or around 18.5%.

Meanwhile, the S&P BSE IT Index is trading at Rs 12,100.6 (down 0.3%). Over the last one year it has moved up from 10,365.5 to 12,100.6, a gain of 1,735 points (up 16.7%).

Overall, the S&P BSE SENSEX is up 12.1% over the year.

(To know more, check out historical annual results for NIIT and quarterly results for NIIT)

Read: Latest Annual Report Analysis of NIIT