Mehabe score: 6 G Factor: 3 Piotski Score: 8 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 3 and Piotski score of 8.
Description
NIIT is a leading Skills and Talent Development Corporation that is building a manpower pool for global industry requirements. The company was established in 1981 to help the nascent IT industry overcome its human resource challenges. #
Main Points
Customer
Customers are divided into two groups, Corporate Learning Group (CGL) and Skill & Careers Group (SNC).
Corporate Learning Group- It offers Managed Training Services and Learning & Development transformation services to market-leading companies in North America, Europe, Asia, and Oceania.
Skill & Careers Group- It delivers a diverse range of learning and talent development programs to individuals and corporate learners in established and growth areas. These include Technology, Banking & Finance, Digital Marketing, Data Sciences & Analytics, Professional Life Skills, Business Process Excellence, and Multi-sectoral Vocational Skills. The Company provides these programs in India & China.Site:NIITLTDMain Symbol:NIITLTD
Stock trades at 294.0, above its 50dma 249.05. It also trades above its 200dma 191.98. The stock remains bullish on techicals
The 52 week high is at 319.40 and the 52week low is at 91.65
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
– is almost debt free.
– has a good return on equity (ROE) track record: 3 Years ROE 44.49%
– has been maintaining a healthy dividend payout of 44.11%
-Promoter holding has increased by 1.13% over last quarter.
Weakness
– The company has delivered a poor sales growth of -1.07% over past five years.
-Earnings include an other income of Rs.87.84 Cr.
Competition
– The industry trades at a mean P/E of 208.4x. Jetking Infotrai trades at the industry’s max P/E of 491.0x. NIITLTD trades at a P/E of 27.2x
– Industry’s mean G-Factor is 2.3 while the mean Piotski score is 8.0. NIITLTD has a G-Factor of 3 and Piotski scoreof 8.
– Average 1 month return for industry is -5.1%. The max 1- month return was given by NIIT: a return of 6.61 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 276.0 cr compared to Rs 211.0 cr for period ended Mar 2020, a rise of 30.8%
Company reported operating profit of Rs 64.0 cr for period ended Mar 2021, operating profit margin at 23.2 %.
Operating profit was negative for the same period last year thus company has improved its margins this year
The EPS for Mar 2021 was Rs 3.27 compared to Rs 2.93 for previous quarter ended Dec 2020 and Rs 0.04 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 949.0 cr for period ended Mar 2021 vis-vis sales of Rs 889.0 cr for the period ended Mar 2020, a growth of 6.3%. The 3 year sales cagr stood at 3.7%.
Operating margins expanded to 16.0% for period ended Mar 2021 vis-vis 4.0% for period ended Mar 2020, expansion of 1200.0 bps.
Net Profit reported at Rs 143.0 cr for period ended Mar 2021 vis-vis sales of Rs 1327.0 cr for the period ended Mar 2020, falling 828.0%.
Company recorded a healthy Net Profit CAGR of 32.1% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 234.0 cr for period ended Mar 2021 vis-vis Rs 47.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was 9.0% compared to 44.0% over the last 3 Years. – The stock has given a return of 202% on a 1 Year basis vis-vis a return of 46% over the last 3 Years. – The compounded sales growth on a TTM bassis is 7% vis-vis a compounded sales growth of 4% over the last 3 Years. – The compounded profit growth on a TTM basis is -89% vis-vis a compounded profit growth of 33% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Mar 2021 fii holding stood at 22.56% vis-vis 23.8% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 31.98% vis-vis 30.56% for Dec 2020
Conclusion
– has reduced debt.
– is almost debt free.
– has a good return on equity (ROE) track record: 3 Years ROE 44.49%
– has been maintaining a healthy dividend payout of 44.11%
-Promoter holding has increased by 1.13% over last quarter. – The company has delivered a poor sales growth of -1.07% over past five years.
-Earnings include an other income of Rs.87.84 Cr.
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 249.05 and is trading at 294.0 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
