NIIT Ltd

Finally , Niit ltd seems to be coming out of the consolidation. Further, it is poised for a volatility breakout on weekly and daily charts and that gives rise to the expectation that if a rally does happen in Niit, it will be a swift one. Its counterpart, Aptech has already run up hugely…looks like the time has finally come for NIIT…fundamentally, it continues to show gradual improvement.

DISC…hold a small position in NIIT…will scale up if my reading of the technicals proves to br right. And i exit if market proves me wrong.

After many false signals, finally a breakout in NIIT kya? Hope so and keeping my finger crossed.

Looks like the breakout is happening today. The script was up 15% intraday.

Have a look at the NIIT chart…appears to be the beginning of uptrend

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[quote]“The business transformation programme has started to yield results. Our go forward business has grown 5 per cent year-on-year,” NIIT CEO Rahul Patwardhan said in a statement.

NIIT CEO Designate Sapnesh Lalla said the Corporate Learning Group (CLG) business continues to be on a strong growth path. “We added two new MTS clients this quarter and have significantly expanded services of an existing client. We go into second quarter with a healthy pipeline of new deals,” he added.[/quote]
http://economictimes.indiatimes.com/markets/stocks/earnings/niit-q1-net-profit-zooms-to-rs-10-4-crore/articleshow/59807068.cms

All sorts of takeover rumors are floating in the market and the stock is going up with high volumes…

Disclosure…Holding a good qty of NIIT shares from 88 level onwards…averaging on the rise…

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Quarterly chart of NIIT…this stock has been moving along the lower forkline since last 6 quarters and has been really really frustrating the investors since last 18 months…once it leaves this lower forkline and goes above the resistance @ 120…it can really explode on the upside…one thing is for sure now in NIIT, the lower forkline is providing rock solid support to the stock…and that limits the downside risk…

Breakout in such stocks can be quite explosive…can cause a massive rally…but that will happen only when it happens and till such time its a game of patience…a standstill stock in a bull market…

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NIIT Ghana donates Computers in Ghana

Recently started to read about this company and looks like they will opening up around 300 centers in next 3-5 years for software trainings. Here are couple of old articles that talk about this:

Looks interesting. Considering that Baring PE (BPE) would value NIIT tech at 10Kcr, the ~24% of NIIT Limited would be valued at 2500 cr which is much higher than the current market cap. Not sure about the deal structure but given that BPE wants to buy out this stake first and promoters’ stake (~30% in total) before going for open offer to acquire the remaining ~70% stake, the purchase would be through cash.

BPE looks desperate to go ahead with this as they failed to convince Mindtree earlier.

Note that the BPE ultimately wants to merge NIIT tech with their other holding Hexaware tech to reduce their reduce stake in Hexaware Tech. They wants to reduce their stake as their purchase of Hexaware Tech turned out to be expensive. BPE sold some of their stake in Hexaware in the open market at a valuation of 13K cr and Hexaware is currently trading at 9,600Cr.

All in all, I believe that they would proceed with this purchase unless NIIT Ltd has other plans on the anvil.

Opnions are welcome.

niit1 niit2

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Anyone else following the stock?According to the sep 2019 balance sheet the company has about 1800 working cap and market cap of 1400 crore.It has done a buyback and a dividend payout amounting to about 460 crore.Did the company announce any new plans in 2020?

Yes I do track and own it. Have not heard of any new plans in 2020 yet so waiting for q4 results announcement. I think the business should do well (relatively) even in current circumstances and digital learning should pick up. Will be interesting to hear from management on FY 21 outlook.

very good post

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Hello guys. Did anyone attended NIIT Ltd AGM today? Can anyone who has attended share their notes. It would be really helpful. @bhaskarbora67 ji have you attended the agm by any chance?

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NIIT has recently announced the demerger of their company into 2 entities (Ed-tech and corporate learning)

Currently they have 2 verticals -

  1. Corporate Learning Group (CLG): NIIT partners with large companies and help them with their internal training of employees which is sometimes either regulatory training or by company’s own mandates.

Regulated training example - Life sciences cos and ONGCs are required by law to have their employees trained for particular tasks and have certifications, so companies outsource this to companies like NIIT as their Managed Training service (MTS) partner.

They are well diversified in terms of client sectors such as ITs, BFSIs, Life sciences, ONGCs, Mining etc.

Current MTS client count at 65 and revenue visibility at $326M (2x sales) with 100% contract renewal track record.

This business has EBITDA margins of 25% currently and growth rate of 30% for FY22 with management guidance of sustainable 20-25% growth over the years and recently announced $500M target revenue in 4 years time for CLG

NIIT is one of the Top 5 MTS players.

They also partnered with RECO Canada to provide real estate agents license training and examination for which they earn fees per reco agent application and further exams.

2nd vertical -

Digital Learning and TpaaS (Talent pipeline as a service) - In this, NIIT has 2 things going,

  1. Stackroute and TpaaS
  2. RPS consulting - Recent acquisition for 80 crs for 70% (balance over milestones) which has a run rate of 120cr annually and ebitda margins in high teens

Currenly Stackroute and TpaaS are in growth phase (20% QoQ and 60% YoY) but in minor losses due to small base and operating leverage issues.

Overall this vertical is EBITDA positive (largely due to RPS acquisition) at 10% ebitda margins at revenue runrate of 320+ crs annually.

Management recently announced 5x potential in 5 years time for this vertical.

So after Demerger, NIIT has proposed seperate listing of these 2 verticals.

NIIT currenly has a very strong balance sheet with cash of 1200cr on books (due to sale of their NIIT tech (now Coforge) stake a year ago)

So management has said they’ll give 500crs to CLG as CLG is highly profitable business hence not much requirements. 700crs to Digital Learning biz as it will be required to fund high growth and sustain the company meanwhile without taking debt.

Management and employees are already different for both the verticals so it will be smooth process but due to regulatory approvals etc some 18 months time required but Appointment date is 1 April 2022.

So currently, due to the drag of digital learning biz, the overall margins for NIIT is diluted to 21% but after Demerger it will bump up to 25% for the CLG entity stock.

Currenly, NIIT trades at 28x TTM PE with a growth rate of 25% guided for and margins at 20%+ levels and 1200cr cash on book

After Demerger, we are getting a Ed-tech company with high growth rate and good TAM and can command good valuations due to the scope and valuations of peers such as Byjus while being profitable overall.

They had their physical school biz which is now discontinued and they are looking for buyers of that biz.

Key risks -

  1. Travel cost benefits due to covid however if clients are okay with digital training in CLG then these costs will be nominal.

  2. Biz has existed for 40+ years but the growth has really picked up in 2020-2021 onwards so this might be one-off or covid benefits but I don’t see it that way as war of talent is on and biz are focusing on outsourcing non-core activities such as training and certifications.

  3. Can’t really asses the quality of training provided, so no personal experience however they have won several awards over the years and have a 100% renewal track record and clients are top in their field eg. Shell, Bank of America, Nokia, Ebay, Citi, Metlife, Dell, SAP, BP, Sanofi, GSK, Hitachi etc to name a few.

Disclosure: Invested.

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Just on quality of training, have been a customer, couple of times, way back between 2012-2014 period. Always felt, that it was waste of money for me as a student as online self learning was better. But studying the business now to know if such guidance will materialize

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