Niit Technologies reports 145% Net Income growth in 2016 and 13.1% Revenue growth

06-05-2016 • About Niit Technologies ($NIITTECH) • By InTwits

Niit Technologies reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:

Niit Technologies is a fast growth stock: FY2016 revenue growth was 13.1%, 5 year revenue CAGR was 16.8% at FY2016 ROIC 25.3%
Niit Technologies has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.1%. At the same time it's a lot of higher than industry average of 3.3%.
CAPEX is quite volatile: ₹1,908m in FY2016, ₹13,673m in FY2015, ₹12,029m in FY2014, ₹17,719m in FY2013, ₹31,507m in FY2012
The company has highly profitable business model: ROIC is 25.3%

Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability

The company's Revenue jumped on 13.1%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 1.7 pp from 25.3% to 27.0% in FY2016. During FY2012-FY2016 EBITDA Margin bottomed in FY2015 at 14.2%.

Net Income margin increased on 5.6 pp from 4.8% to 10.4% in FY2016. During the last 5 years Net Income margin bottomed in FY2015 at 4.8%.

Investments (CAPEX, working capital and M&A)

The company's CAPEX/Revenue was 6.0% in FY2016. The company showed small growth in CAPEX/Revenue of 1.4 pp from 4.6% in FY2013 to 6.0% in FY2016. Average CAPEX/Revenue for the last three years was 6.7%.

Return on investment

The company operates at high and attractive ROIC (25.3%) while ROE is a bit lower (19.0%). ROIC increased on 7.1 pp from 18.1% to 25.3% in FY2016. ROE surged on 10.5 pp from 8.5% to 19.0% in FY2016. During the last 5 years ROIC bottomed in FY2015 at 18.1%. During FY2012-FY2016 ROE bottomed in FY2015 at 8.5%.

Leverage (Debt)

Debt level is -0.7x Net Debt / EBITDA and 0.0x Debt / EBITDA. Debt surged on 32.9% while cash surged on 25.5%.

Niit Technologies has no short term refinancing risk: cash is higher than short term debt (483,751.5%).

Management team

Niit Technologies's CFO is Amit Kumar Garg. Amit Kumar Garg has 4 years tenure at the company.

Financial and operational results

Niit Technologies ($NIITTECH) key annual financial indicators

mln. INR	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	15,765	20,214	23,050	23,725	26,824	13.1%
SG&A			79	79
EBITDA	2,701	3,327	3,542	3,359	4,902	45.9%
Net Income	1,972	2,132	2,305	1,141	2,800	145.4%
Balance Sheet
Cash	2,211	2,317	2,199	2,678	3,362	25.5%
Short Term Debt	423	0	0	0	1
Long Term Debt	63	60	53	49	64	31.5%
Cash flow
Capex	931	930	1,399	1,876	1,609	-14.2%
Ratios
Revenue growth	27.9%	28.2%	14.0%	2.9%	13.1%
EBITDA growth	13.6%	23.2%	6.5%	-5.2%	45.9%

EBITDA Margin	17.1%	16.5%	15.4%	14.2%	18.3%	4.1%
SG&A, % of revenue			0.3%	0.3%
Net Income Margin	12.5%	10.5%	10.0%	4.8%	10.4%	5.6%
CAPEX, % of revenue	5.9%	4.6%	6.1%	7.9%	6.0%	-1.9%

ROIC	27.5%	26.9%	23.9%	18.1%	25.3%	7.1%
ROE	23.6%	21.1%	19.1%	8.5%	19.0%	10.5%
Net Debt/EBITDA	-0.6x	-0.7x	-0.6x	-0.8x	-0.7x	0.1x

Peers in IT Consulting & Software

Below you can find Niit Technologies benchmarking vs. other companies in IT Consulting & Software industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Ramco Systems ($RAMCOSYS)	9.3%	7.3%	9.9%	37.0%	-
Cyient ($CYIENT)	-	20.6%	17.8%	24.0%	13.1%
Empower India ($EMPOWER)	-3.7%	-13.2%	-32.6%	23.9%	-
Hexaware Technologies ($HEXAWARE)	34.3%	17.3%	13.0%	21.0%	-
Tech Mahindra ($TECHM)	6.8%	25.2%	174.0%	20.1%	-
Median (22 companies)	9.3%	20.4%	13.6%	9.1%	13.0%
Niit Technologies ($NIITTECH)	-	28.2%	14.0%	2.9%	13.1%

Top companies by Gross margin, %


Top	FY2012	FY2013	FY2014	FY2015	FY2016
Tata Consultancy Services ($TCS)	-	-	47.4%	42.4%	43.9%
Infosys ($INFY)	41.3%	98.1%	35.9%	38.3%	37.4%
Mindtree ($MINDTREE)	31.5%	36.2%	-	34.8%	32.4%
Wipro ($WIPRO)	29.2%	30.4%	32.0%	31.6%	30.4%
Median (4 companies)	32.7%	36.2%	35.9%	36.6%	34.9%

Top companies by EBITDA margin, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Oracle Financial Services Software ($OFSS)	35.3%	35.2%	37.4%	39.7%	-
Infosys ($INFY)	31.6%	27.9%	26.3%	27.1%	27.1%
Tata Consultancy Services ($TCS)	29.5%	28.6%	30.7%	26.1%	28.2%
Wipro ($WIPRO)	19.1%	20.9%	22.4%	22.3%	21.1%
Mindtree ($MINDTREE)	15.1%	19.8%	20.6%	20.3%	17.7%
Median (25 companies)	15.1%	17.8%	18.5%	12.3%	14.3%
Niit Technologies ($NIITTECH)	17.1%	16.5%	15.4%	14.2%	18.3%

Top companies by CAPEX/Revenue, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Ramco Systems ($RAMCOSYS)	-	22.1%	15.3%	12.4%	-
Financial Technologies (India) ($FINANTECH)	8.9%	11.4%	-	6.5%	5.4%
Mindtree ($MINDTREE)	2.5%	4.5%	5.0%	5.6%	3.4%
Tech Mahindra ($TECHM)	5.4%	2.6%	5.0%	5.0%	-
Hexaware Technologies ($HEXAWARE)	3.8%	1.8%	2.3%	4.4%	-
Median (20 companies)	3.7%	3.2%	2.6%	3.1%	3.1%
Niit Technologies ($NIITTECH)	5.9%	4.6%	6.1%	7.9%	6.0%

Top companies by ROIC, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Tata Consultancy Services ($TCS)	48.6%	48.4%	50.2%	40.5%	44.4%
Hexaware Technologies ($HEXAWARE)	33.5%	39.2%	34.7%	35.7%	-
Mindtree ($MINDTREE)	24.9%	34.6%	36.2%	32.0%	28.9%
Sqs India Bfsi ($SQSBFSI)	12.1%	27.0%	29.4%	30.6%	39.9%
Tech Mahindra ($TECHM)	15.4%	20.1%	43.0%	29.7%	-
Median (30 companies)	19.1%	20.4%	22.9%	20.8%	22.8%
Niit Technologies ($NIITTECH)	27.5%	26.9%	23.9%	18.1%	25.3%

Top companies by Net Debt / EBITDA


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
3I Infotech ($3IINFOTECH)	8.5x	20.3x	27.7x	14.7x	-
Ramco Systems ($RAMCOSYS)	8.8x	-	27.6x	4.2x	-
Onward Technologies ($ONWARDTEC)	2.4x	2.2x	4.1x	1.9x	-
Kpit Technologies ($KPIT)	0.3x	0.5x	0.7x	0.4x	-0.3x
Mphasis ($MPHASIS)	-0.1x	0.2x	-	0.2x	-
Median (23 companies)	-0.0x	-0.2x	-0.2x	-0.2x	-0.3x
Niit Technologies ($NIITTECH)	-0.6x	-0.7x	-0.6x	-0.8x	-0.7x

Niit Technologies stock price chart

Niit Technologies financials

mln.	FY2010	FY2011	FY2012

Revenue	29,080	12,323	15,765
EBITDA	1,911	2,378	2,701
Net income	1,264	1,822	1,972
CAPEX	490.4	502.2	931.1
Debt	217.2	106.9	486.5
Cash	920.8	1,129	2,211

About Niit Technologies

NIIT Technologies Limited provides IT solutions in the Americas, Europe, the Middle East, Asia, and Australia. Its services include application development management services, such as application management and development, application renewal and testing; and data analytics services in the data warehousing and business intelligence, such as consulting and assessment, BI/DW solution implementation, data integration, and information delivery services. The company also provides infrastructure management services, including remote infrastructure management services, such as technology management, service desk, and data center services; managed security services for online applications and transactions; and application management services. In addition, it offers testing services, such as test automation, testing COE implementation, and domain specific testing services; and business process outsourcing services. Further, the company provides cloud computing services comprising software-as-a-service, an on-demand delivery model for software; platform-as-a-service, which provides development, deployment, testing, and integration of applications to the cloud; and infrastructure-as-a-service that offers bandwidth, storage, and computing power on an on-demand basis over the Internet. Additionally, the company offers geographic information systems solutions, including software products, training, technical support, data conversion, and application development services; mobile solutions, including mobile platform and frameworks, mobile testing, user interface design, mobile Web, and enterprise mobility solutions; and IP led solutions. It serves travel and transportation, banking and financial services, insurance, manufacturing, media, and government sectors. NIIT Technologies Limited was incorporated in 1992 and is based in Noida, India.