NIIT Q3 Review - Mixed Results, Hiring Freeze In IT Remains A Challenge: Dolat Capital

Dolat Capital Report

NIIT Ltd.'s reported revenue growth of 4.6% QoQ (our estimate 12%), led by uplift in banking, financial services, and insurance sector which grew by 37% YoY, while IT biz declined 20% YoY.

Ebit stood at Rs 23 million versus loss of Rs 31 million in Q2. Operating profit margin stood at 2.7% which improved by 647 bps QoQ led by cost rationalization and other operational efficiencies. Employee exp down by 13% YoY (headcount down by 218 YoY).

Company remains cautious on challenging macro environment, with growth hindered by hiring freeze by tier-I GSI’s which used to contribute significant portion in the volumes. It expects volume to pick up gradually in FY25.

NIIT believe that sustained traction in BFSI vertical to drive growth performance, while improved scale is driving up margin profile.

Hence, we now assign 'Reduce' rating with target price of Rs 120, valued at 20 times of FY26E earning per share.

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