NIIT Ltd quarterly net profit up 3.5 pct at Rs 12 cr

Written by PTI | New Delhi | Updated: Oct 21 2013, 17:43pm hrs
NIITThe Gurgaon-based firm had posted a net profit of Rs 11.6 crore in the year-ago period
IT training solutions firm NIIT Ltd today reported 3.5 per cent rise in consolidated net profit at Rs 12 crore for the second quarter ended September 30, 2013 aided by growth of its corporate learning solutions (CLS) and banking, finance and insurance training courses.

The Gurgaon-based firm had posted a net profit of Rs 11.6 crore in the year-ago period.

NIIT Ltd's consolidated revenues, however, fell by 6 per cent to Rs 262.4 crore in July-September quarter this fiscal from Rs 279.1 crore in the same quarter of 2012-13 fiscal on account of low demand for IT training and the firm wrapping up some of its government contracts.

Commenting on the results, NIIT Ltd CEO Vijay Thandani said: "Our profits were helped by a 32 per cent year-on-year revenue growth is CLS as well as the tremendous performance by Institute of Finance, Banking and Insurance Training (IFBI)."

On the revenue front, the firm saw a decline in demand from IT training and also it wrapped up a government contract, which led to a decline in revenues, he added.

"Besides, due to the pass through revenue -- which is a one time revenue with zero margin -- of about Rs 14 crore, our revenues fell by 6 per cent. If we deduct that amount, NIIT's revenue decline will be by just 1 per cent," Thandani said.

CLS posted net revenue of Rs 99.3 crore and the pending order book was USD 53.1 million, 69 per cent of which is executable over the next 12 months.

IFBI completed 7 years of operations this quarter. During which it trained over a lakh banking professionals and placed over 25,000 graduates. During the quarter IFBI placed 3,312 students and fresh enrolments grew by 15 per cent Y-o-Y.

Career Building Solutions (CBS) recorded net revenue of Rs 126.9 crore backed by cloud-enabled programme enrolments of over 13,800. The initiative has expanded to cover 78 courses and 209 centres with cumulative enrolment of more than 47,000 students.

According to Kotak Securities Head (Private Client Group Research) Dipen Shah, NIIT's results were below expectations. The Individual Learning business continues to suffer from weak sentiments. Placements have fallen 2 per cent Y-o-Y.

The Schools learning business has also suffered due to completion of a large state government project. The Corporate Learning business continues to report strong growth and we expect it to show consistent results, going ahead, he added.

"A pick-up in IT services exports markets should lead to revival of growth in Individual Learning business, going ahead. We expect the sentiments on the stock to improve after it starts showing steady growth in Individual Learning business," Shah said.

Management training enrolments at NIIT Imperia grew 18 per cent Y-o-Y in the July-September quarter, while, School Learning Solutions (SLS) recorded net revenue of Rs 35.8 crore during the quarter.

The recently launched Quick School Cloud -- NIIT's Cloud based ERP solutions for schools -- witnessed growing interest with 28 schools commissioning this service, spanning 33,000 students in its pilot phase.

On outlook, NIIT Ltd Chairman Rajendra S Pawar said: "IT job market is currently subdued and there is growth in non-IT jobs, but, with the kind of results IT sector is giving and if it continues for a couple of quarters, we will see growth in the IT hiring space again."

This is not the first time that the IT hiring space is going through a lull, he added.

"Banking training space will see growth with RBI giving banking licences, which will spur demand for training in banking, finance and insurance. Also as public sector banks have retirements due, this will again create requirement for training of banking staff," Thandani said.

On the global job market and demand for training, Pawar said that the re-emergence of manufacturing sector in the US and also rise in high-end technology services will create demand for staff training in managed services.

"Such a scenario will boost our managed training services offering. Going forward, I think these events are going to boost the company's margins," he added.

NIIT Ltd's managed training services (MTS) has 17 global clients and its revenues revenues account for 75 per cent of the corporate business, which stands at Rs 99.3 crore.