NIIT Technologies declines on disappointing Q2 numbers

Stock slips 3.5% on the back of 36% drop in net profit during the September quarter

NIIT Technologies has slipped 3.5% to Rs 380 after the company reported a 36% drop in its net profit for the second quarter ended September 30, 2014 at Rs 40.1 crore.

The company's consolidated revenues, however, remained flat at Rs 588.3 crore in the recently concluded quarter compared to Rs 587.3 crore in the July-September 2013 period.

HDFC Securities expected the USD revenues to decline by 1.4% quarter-on-quarter (q-o-q) for Q2FY15. "This is owing to continued weakness in the two financial services clients in USA as well as sequential decline in hardware revenues. Weaker revenues and transition costs associated with the ramp up of a large deal are likely to weigh on margins. Hence, we expect EBIDTA margins to improve only marginally on a sequential basis," they said in a result preview report.

Analysts at Emkay have cut FY15/16 EPS estimate by 11/17% respectively, as they moderate growth and operating margin assumption coupled with higher depreciation charges for FY15/16E. They have retained a 'hold' rating on the stock with a target price of Rs 360.

The stock opened at Rs 385.20, which was also the high point of the day thus far, and hit a low of Rs 360.15 in intra-day deals. A total of 36,000 shares changed hands on BSE and NSE till 0950 hrs.