Neutral on NIIT Technologies, Rs 1100: Motilal Oswal

Motilal Oswal has a neutral call on NIIT Technologies Ltd. with a target price of Rs 1100. The current market price of NIIT Technologies Ltd. is Rs 1213.35 Time period given by the brokerage is a year when NIIT Technologies Ltd. price can reach defined target. NIIT Technologies Ltd., incorporated in 1992, is a midcap company with a market cap of Rs 6921.24 crore.

Investment rationale by Motilal Oswal

We upgrade our revenue estimate by ~5% for FY19/20E given the beat and expected acceleration. However, we have not changed our margin assumptions as GPM is down 130bp YoY and we see limited benefits from INR depreciation on margins, as hedge losses booked in revenue act as an offset. We now expect USD revenue/INR earnings CAGR of13/24% over FY18-20. Our TP of INR1,100 discounts forward earnings by 15x. We maintain Neutral, and would ascribe a higher multiple as confidence grows on sustenance of such traction in growth and margins.