NIIT Technologies
Increasing sales, increasing profits, good dividend yield and a P/E lower than industry peers ...
The business stats -
Share capital - 38.65 crs
Loans - 53.90 crs
Investments - 96.97 crs (in grp cos, so cant be factored in NCAV calc)
Net CA - 79.07 crs
FV - 10 rupees per share
Dividend - 5.50 rupees per share
LY profit - 40.25 crs
CMP - 175.00 rupees per share
This calculates to -
Dividend yield of 3.14%
P/E of 16.80
NCAV of 6.51 rupees/share (very low)
The sales and profit growth has been a neat 20% for this FY. I estimate a profit closing of 48 crs for this year and a dividend payout of 5.5 rupees per share (I would not accomodate an increase in dividend as the company is desirous of suitable acquisitions abroad which would be from internal accruals rather than any borrowings - pls note that the cost of funds has increased over the last 2 years in Indian and international markets; also an increase in debt in the balance sheet would affect the credit rating of the organisation and thereby increase the cost of funds).
Given the increase in profits for the year, the P/E moved go down to 14.09 which is much lower than most other software companies.
Infosys Technologies - 41.6
I-flex - 41.7
HCL Technologies - 81.3
Patni Computers - 32.9
Polaris Software - 19.5 (avoid this stock for now)
Satyam Computers - 34.0
TCS - 41.5
Wipro - 51.1
The management of the organisation is excellent and has a good vintage of 25 years. I like the fact that the education arm is present in around 40+ countries around the world including a huge presence in China. (A presence in China with 100+ education centres cannot be bad). This will help leverage the Software solution business in NIIT Technologies.
Disclaimer: My first job was with NIIT Ltd (not NIIT Technologies, I was in the education and training business - it was good fun working with the likes of Sanjeev Shrivastava, Gulraj Bhatia ... and excellent leaders in Mr. Rajender S Pawar and Mr. P Rajendran. This estimate is however devoid of any occupational loyalties. Do the math yourself for comfort.
The business stats -
Share capital - 38.65 crs
Loans - 53.90 crs
Investments - 96.97 crs (in grp cos, so cant be factored in NCAV calc)
Net CA - 79.07 crs
FV - 10 rupees per share
Dividend - 5.50 rupees per share
LY profit - 40.25 crs
CMP - 175.00 rupees per share
This calculates to -
Dividend yield of 3.14%
P/E of 16.80
NCAV of 6.51 rupees/share (very low)
The sales and profit growth has been a neat 20% for this FY. I estimate a profit closing of 48 crs for this year and a dividend payout of 5.5 rupees per share (I would not accomodate an increase in dividend as the company is desirous of suitable acquisitions abroad which would be from internal accruals rather than any borrowings - pls note that the cost of funds has increased over the last 2 years in Indian and international markets; also an increase in debt in the balance sheet would affect the credit rating of the organisation and thereby increase the cost of funds).
Given the increase in profits for the year, the P/E moved go down to 14.09 which is much lower than most other software companies.
Infosys Technologies - 41.6
I-flex - 41.7
HCL Technologies - 81.3
Patni Computers - 32.9
Polaris Software - 19.5 (avoid this stock for now)
Satyam Computers - 34.0
TCS - 41.5
Wipro - 51.1
The management of the organisation is excellent and has a good vintage of 25 years. I like the fact that the education arm is present in around 40+ countries around the world including a huge presence in China. (A presence in China with 100+ education centres cannot be bad). This will help leverage the Software solution business in NIIT Technologies.
Disclaimer: My first job was with NIIT Ltd (not NIIT Technologies, I was in the education and training business - it was good fun working with the likes of Sanjeev Shrivastava, Gulraj Bhatia ... and excellent leaders in Mr. Rajender S Pawar and Mr. P Rajendran. This estimate is however devoid of any occupational loyalties. Do the math yourself for comfort.
posted by Shankar Nath at 7:15 PM
2 Comments:
Correction - Peers in this case will be the Small/Medium IT players. The competition here would be with -
1. Mastek
2. Paradyne
3. Rolta
4. Visualsoft
5. Aftek Infosys
Aftek Infosys also seems good at CMP of 91 rupees.
Hi shankar,
Let me tell you some more facts about NIIT tech as it is the biggest position in my portfolio. First things first,
- i like the management and their strategy(Focus&Differentiate) execution very much.
- this co has one of the best ROCE and ROOA in industry(Tire II IT cos), good manpower utilization -north of 80%
-Healthy On-site and off-shore Mix with potential to improve further.
-the kicker here can be the Tuck-in Acqusitions that the company is searching carefully and the strtegic sale of the stake held by NIIT ltd in NIIT tech.
-The performance of the software division is pulled down by the BPO start up whch hasn't borke even.Sowtware biz is having healthy ebitda margins with scope for exapnsion.
Regards,
jagadish
Post a Comment
<< Home