JMFL
NIIT Technologies (Buy)
CMP: 1056.4
Target: ₹1100
NIIT Technologies Ltd is an information technology (IT) solutions company. The company is engaged in providing computer programming consultancy and related activities.
The transformation at NIIT Tech under the new CEO has centred on improving the front end, with a significant ramp-up of the business and sales leadership team. This has led to enhanced market visibility, which reflects in the improved order intake/large deal wins over the last four quarters.
Management expects it to scale up further as the impact of new initiatives — such as a more rewarding sales incentive structure, a dedicated large deal perusal team and a sharper focus on partnerships/alliances with product companies — kicks in. Its digital story, centric on the Incessant/RuleTek acquisitions, remains strong.
We expect this to support current valuations, even though they may optically appear expensive versus historical levels. We raise our FY20 EPS estimate by 3 per cent and target PER to 16x (14x earlier), leading to our revised price target of ₹1,100 (₹910 earlier).
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