NIIT Tech's Dec quarter profit down 5.3%, revenues up 14.2%

Company's management has guided for more losses if rupee further appreciates

Mid-tier information technology firm NIIT Technologies reported a 5.3% decline in net profit at Rs 53.1 crore for the quarter ended December 2013 compared to the same period last year. This came on back of a 14.2% jump year-on-year in revenues for the three month period at Rs 587.3 crore.

The company reported a 120 basis point expansion in the margins and the decline in the profits was attributed to rupee’s appreciation during the quarter which resulted in a loss as a result of revaluation of foreign currency assets and liabilities. The company’s management has guided for more losses if the rupee further appreciates.

Strong growth in western markets, particularly the US, contributed to the growth, said Arvind Thakur, chief executive and joint managing director of NIIT Technologies. “Growth in the US was driven by expansion of business in the BFSI (banking, financial services and insurance) segment,” he added.

During the quarter, NIIT won a $300 million contract for a period of 10 years from a US-based BFSI company – the name of which was not divulged. NIIT’s chairman Rajendra S. Pawar said that the US economy is much better and the sector is seeing significant signs of improvement.

While US sequentially grew by 7.9%, revenues from Europe and Middle East region were up 4.5% during the quarter. The overall growth in revenue on a sequential basis was flat as the India market declined by 28.6%. This was on account of reduced hardware purchases in domestic government business.

Pawar said that the company has had the largest order intake ever with fresh orders worth $377 million secured during the quarter leading to an order book executable over 12 months of $ 265 million. NIIT added four new clients -- one each in BFSI, travel & transportation, manufacturing and government segment.

Dipen Shah of Kotak Securities said that NIIT’s results were better than expectations. While the 3.6% constant currency revenue growth in services was higher than what was anticipated, margins improved sequentially due to the reduced revenues from the hardware business.
 
“The company has focused on and increased revenue contribution from high growth areas of US geography and the BFSI vertical, which is a positive. The $300mn order win also reflects the company’s improved positioning in the market space. We maintain a positive bias towards the stock,” he added.

The company’s stock closed up by 4.22% at Rs 387.55 on BSE after touching a day’s high of Rs.399 on a day when the benchmark index was down by 101.33 points to close at 21,032.88 on Tuesday.