NIIT Ltd

Current market price: Rs 52.75
Target Price: Rs 132
Upside: 150.24%
Brokerage: Emkay Global Financial Services

NIIT’s “retail IT training” business will gain with the registrations for the ‘Bhavishya Jyoti Scholarship-08’. This segment will also do well with the demand for ‘IT as a career’ still buoyant, with expected revenue growth of 28.4 per cent and margin improvement of around 70 bps y-o-y to 21.2 per cent.

NIIT’s “school” business expects revenues to flow from the implementation of the AP government school order (around 2,005 schools) in the coming days. The ‘eGuru’ - interactive learning’s offering product (running in 25 schools now) will have a full fledged launch in October’08, which will offer cross-sell opportunities in around 1,100 private schools and will eventually grow to around 15,000-20,000 schools in the next 3 years. In NIIT’s “corporate training” business, custom content development budgets in the US have remained under pressure along with corporate training budgets seeing a greater shift towards e-learning and training outsourcing. The “school” and “corporate training” businesses are expected to garner 30 per cent and 4 per cent in terms of revenue growth and margins of 14.6 per cent and 3.8 per cent, respectively in the same breath for FY09.

The company’s other segment of new businesses is also growing rapidly. At Rs 63, the stock is trading at 11.6x FY09E with EPS target of Rs 5.4.