Agreed if a severe and long recession comes then it will impact NIIT earning.
In that scenario, balance sheet strength of NIIT will kick in.
They have sufficient cash to make acquisitions(foot in the door technique).
Case in point : through acquisition of eagle international institute, they got exposure to life science discovery and has scaled up from 2 customer at the time of acquisition to 14 currently
Invested (looking to add if there is further correction)
What is important for the investor to appreciate is the type & quality of the l&d spend. All l&d spend is not created equal. Some is discretionary some is not. I donât remember the number right now but if i recall correctly 80-90% of niit revenues come from non discretionary regulatory related l&d (mandatory retraining employees have to do every year in order to be compliant with regulator). This is why one cannot apply top down macro without understanding the business first 
Two opposing forces are at play during recession:
cos cutting down non discretionary l&d spends.
Cos which do not do mandatory l&d outsourcing figuring out that it saves them $$$ so need to outsource.
Recession are synonymous with austerity. So any mandatory regulatory l&d spend (large part of revenue is from pharma, financials) in fact in a call with IR, what they mentioned is that during covid, immediately the l&d spending for same customer went from 100 to 80 (possibly cutting down discretionary l&d) then it went back up to 120 due to the increased l&d outsourcing by companies (new client additions or same client outsourcing new mandatory l&d)
Yes, proprietary l&d is difficult to outsource which is why the growth will be steady. The core number to visualise in terms of l&d outsourcing is 5% of all l&d spends are outsourced globally. (if i recall correctly 60-70% of these are non discretionary). The opportunity size is massive. Despite that, you wonât give 30-40-50% type growth which IT companies showed in 2000s because l&d outsourcing is time consuming
Regarding annecdotal feedback on niit, i will only add that most chemical supply chain participants stay away from chemical cos because they know the innards. Most it chain participants donât see what great thing it companies do, know the inner workings (some have claimed even infy & TCS do shady things) and so stay away from it.
Home sector bias is a very well known phenomenon which is bound to occur because the employee knows that sector inside & out
Unless one has talked to 10 clients of niit & 7-8 have negative feedback i would take 2 HR feedback with a grain of salt.
Lastly , the proof of pudding is in the pudding. Weâve only had 1 proper recession in last 20 years. 2008. Check niit revenue in 2007 2008 2009. In all 3 it showed YoY growth. Where is the vanishing l&d spends ??
Disclaimer : invested, biased
Above is from Fy09 and below from fy10
During this period bulk of revenues came from individuals and that segment continued to do well. Also in fy10 they got a large BPO contract while that industry was still in its heydays.
Agree with mostly everything else you have said. FYI the 2 gentlemen i mentioned are not part of HR. They are instructors but i get your point. I have own my biases. I had a lot of friends (IT graduates) who attended NIIT in fy08/09 because they were made to believe that it would give them an edge in the job market which it didnt. After listening to so many stories of over selling and false promises by NIIT I am finding it hard to shake off my old biases but as I said in my earlier post this might be a new NIIT. Businesses evolve. nothing is static
Echo similar views, it was just a money minting machine at that time providing JAVA, Android, IOS trainings to college students and many folks from my circle didnât benefit at all and wasted 10-15K. Nowadays there are so many edtech options free and paid, hardly heard any junior going to NIIT for trainings. Though CLG business could be better as that follows similar pattern of IT service businesses.
forgot to add this. says here that 50% revenues come from organizations that are highly regulated but that doesnt mean that 50% of revenues are regulatory in nature. This is from Q1Fy22. I am aware they have added more pharma clients since then. Happy to be corrected if i am wrong
True I remember my friend just told me about his experience his friend had done a NIIT training and he(my friend) had done his training vis-vis internship like from one coaching of greater Noida Incapp at a very nominal fees with more advanced skills in comparison to his friend who had done his training from NIIT platform. Later his friend had done his same training from Incapp because NIIT had not provided him the required knowledge and skills that they had mentioned in their course.
P.S- This was when NIIT had offline center for their SNS segment.
To be honest i am willing to look past all that. What matters is where the company is headed. I actually like the CLG business and i feel NIIT will gain market share. Itâs just that currently the street is expecting a 20% Plus growth rate with 20% margins based on management guidance. It very well might do that but Itâs not something i can wrap my head around at the moment. I need to see more evidence. Thatâs all i am saying. Good luck to everyone who is invested here
Hi, I have started studying NIIT recently. My major focus is on the CLG business. Now since the company has announced demerger and the record date is gone. The process will take some time to complete and for NLSL to list separately. Do you suggest buying now ? I am not asking to give buy tip based on current price, I am asking because I think if I buy now I wouldnât get the CLG business on demerger and then I would have to sell again and buy that separately. Please suggest members. Thank you. 
I donât think the record date for elligibility to get both businesses is announced yet. It is expected to take a while. Probably by the end of the year.
Hi @iValueInvestor, thanks for the reply. Actually I came across this article on from business standard and hence the confusion https://www.business-standard.com/article/markets/niit-surges-14-in-two-days-on-board-nod-for-reorganisation-of-clg-biz-122013100321_1.html
@abhas_singh: I think you are referring to appointed date which is Aril 1, 22. I think this is the date based on which they will divide properties, assets, liabilities etc between 2 companies. But the record date still not declared. So if you buy now, you will get both CLG and NLSL.
I feel, newer customer/deal wins can offset the lower spending on corporate learning category.
Views requested.
disc: Invested and might be biased.
What are your views on the SNC business? There is a lot of competition for NIIT in this space, and players like upGrad are offering courses by some very renowned universities. They even have larger and diverse course library. Although RPS adds to the course portfolio, but those are still IT courses, not adding a new vertical. I doubt that this business will be 5x in the next 5 years.
Also, does anyone know who are the competitors to NIITâs CLG business, except Aptech?
SNC business has a good competition from online learning platforms like coursera, udemy,udacity and now upgrade which provide much better content than NIIT. This business from my point of view will not grow at a good pace . But in NIIT I am betting on its CLG business which faces less competition . Also it is somewhat sticky business (3-5-7 years contract are here).
Also demerger of both the businesses are announced. For me when a company has ugly, good segment it always get the valuation of ugly one.
Disc: Invested (may remove SNC after demerger)
The competition is fierce in SNC and would take a new innovative approach to become a leader so betting on NIIT for SNC would be to bet on their ingenuity as the market is wide open but there are too many players.
So far I havenât seen any distinguished offering or marketing campaign which would attract customers from competitors.
Learning Technologies Group (LTG), GP Strategies, Accenture, EY, Cornerstone OnDemand (Has partnered with NIIT for some projects) etc.
None of these are Indian listed companies.
1 risk Iâve identified recently is Auditing and Consulting companies are entering the Corporate learning space and since they already have a wide clientele they can easily cross sell and grab clients without even going into an RFP process.
https://eyvirtualacademy.com/corporate_training_solutions
Accenture is into consulting and EY is into Auditing
Meta (Facebook) was previously a client of Accenture for CLG but NIIT has grabbed them recently. This shows Accentureâs presence in this space.
These are just 2 examples I could find easily, more could be there.
Some highlights from NIIT Annual Report FY22:
CLG EBITDA grew 68% YoY to Rs. 2,989 million. The EBITDA margin was 26%, up 508 basis points YoY. Growth was driven by ramp-up by new customer addition and increase in wallet-share from existing customers despite spend levels on training remain at lower levels during the year. Investments in sales and marketing and new capabilities over the last few years have resulted in significant recovery and growth over the last two years, despite the continuing impact of the pandemic. During the year, the business accelerated new customer acquisition with the addition of 16 new Managed Training Services (MTS) customers, secured 4 renewals and expanded 6 contracts with existing customers. The business ended the year with 66 MTS customers, as compared to 58 at the end of the previous year. As of March 31, 2022, the Revenue Visibility stood at USD 328 million, versus 287 million at the end of FY21.The company has maintained a record of 100% renewals over the last two years. SNC showed smart recovery during the year due to strong actions by the Company and pickup in hiring by the IT and Banking sectors. This recovery was led by NIITâs flagship offerings StackRoute and TPaaS. Margins were back in black for the year despite ramp-up in investments for growth.
India has over 38 million students enrolled in higher education, the number of college graduates entering the work-force is second highest in the world. With over 5 million people employed by the IT/ITES industry and a similar number in BFSI, college students, fresh graduates, and working professionals in India represent a large untapped opportunity.
The process for the demerger is underway and expected to be completed in H1 of FY24.
Global companies are increasing the use of technology, especially around augmented reality (AR) and virtual reality (VR), to drive L&D transformation. NIIT is taking the lead in helping companies in this area.
NIITâs Corporate Learning Business is focused on the
following sectors:
⢠Technology & Telecom
⢠Energy & Commodities
⢠Life Sciences
⢠Banking, Financial Services, and Insurance
⢠Aerospace
⢠Higher Education (Market Entry)
Companies in the selected sectors are amongst the highest consumers of training in terms of amount spent on training per employee per annum
Even with a Gross Enrollment Ratio in higher education of 27.1%, India has over 38 million learners enrolled in over 40,000 colleges and 1,000+ universities. The enrollment is expected to cross 50 million by the assessment year 2025 (AY25). During the year, the IT/ITES industry witnessed strong hiring with a net addition of 445 thousand taking the total employment to 5.1 million. Banks witnessed a strong hiring demand, with over 100K employees added to the workforce in FY22. Banks in India have close to 1.5 million employees, with similar numbers in the Insurance and other Financial Services industries. Together, they represent a multi-billion market for technical and professional skills training per annum.
StackRoute has now been adopted by several corporate customers to develop their top talent, including a leading global systems integrator and 2 of the top 5 IT services companies in India. StackRoute has achieved industryleading completion rates (over 10x of the industry average) and strong outcomes for its learners, resulting in improved recognition from employers and increased bill rates.
StackRoute and TPaaS grew 137% YoY in FY22 and contributed 41% to the SNC revenue. The average remuneration level of NIITâs graduates from its new-age digital programs has been more than twice that of college graduates who get placed directly from college campuses. ( Itâs true you can check it from LinkedIn NIIT graduates get 5lakh p.a where Average package of top 5 five IT companies is in the range of 3.2 lakhs to 4 lakhs for mid tier cities)
99% growth YoY in the SNC business and 35% YoY growth in the CLG business. Excluding the acquisition of RPS Consulting, SNC grew 51% YoY and overall revenue grew 37% YoY.
The top 10 customers contributed about 61% of the CLG revenue in FY22, compared to 59% last year. The Company has maintained a healthy contract renewal rate and strong velocity of adding new customers despite the pandemic. Also, the mix of revenue from the different geographies, sectors and diversified offerings ensures that the Company is well-positioned to manage a slowdown in a particular sector or in a specific geography.
