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NIIT profits soar 57 per cent

NetScribes/Abhijit Basu

An impressive 57 per cent rise in net profit for the year ending September 30, 2000 has encouraged analysts to predict that NIIT Ltd is set to take giant strides in the global software and education market. On Monday, NIIT beat analysts' expectations to announce a net profit of Rs 2.24 billion, compared to last year's Rs 1.42 billion.

Analysts were expecting a 43 per cent growth in net profit for the year.

The markets also rose to the occasion. On Monday, the NIIT stock opened at its previous close of Rs 1,210.15 and closed 13.13 per cent, or Rs 158.85, higher at Rs 1,369.00.

"It's bottomline growth that matters to the market today. Although companies like Infosys and Satyam have always been registering three-digit growth figures, NIIT has been consistent with its growth rate. NIIT's figures may not be as high as the others, but the encouraging factor is that the growth rate has not dipped," says Nayan Mehta, a Mumbai-based stock analyst.

At Rs 5.74 billion, the domestic market accounted for 46 per cent of the company's total revenues of Rs 12.4 billion.

The company's Americas initiative seems to have paid off, with the US market raking in Rs 3.2 billion and accounting for 48 per cent of the company's international revenues of Rs 6.6 billion.

As part of the initiative, NIIT had inducted several senior sales and marketing personnel to spruce up its American operations. The results are evident in the fresh order intake, notably the multi-million dollar orders from Macmillian, Course Technologies and Arthur Andersen.

The European market registered an impressive 412 per cent growth, making up 25 per cent of NIIT's international revenues.

The company has identified e-business solutions, e-transformation solutions and e-knowledge solutions as its key growth drivers in the future. "In the years to come, e-commerce will propel NIIT's growth and ramp up its margins," says Mehta.

During the year, NIIT's e-revenues grew 163 per cent to contribute 37 per cent of its total revenues, up from 14 per cent last year.

Software revenues grew 53.5 per cent to touch Rs 6.14 billion, up from Rs 3.99 billion last year, thereby constituting 49 per cent of the company's total revenues. "Given the kind of growth figures posted by the likes of Infosys and Satyam, it is time the NIIT management took note of the low growth rate of its own software business," says a Mumbai-based stock analyst.

Nevertheless, analysts believe the company is placed strongly and will continue to grow well. "When the inevitable shakeout in the Indian IT marketplace happens, NIIT will be among the few survivors on account of its sound business model. The model is safe and standard - there is no flamboyance in it," says a fund manager at a Mumbai-based brokerage.

In the year just ended, NIIT increased its staff strength from 3,768 to 4,603, running up personnel expenses of Rs 955.42 million - up 23.6 per cent from Rs 772.8 million last year.

The company added 564 new centres this year, with international education centres crossing 100. Revenues from the education services registered a 30 per cent growth to touch Rs 6.28 billion.

"Education and training are a commodity today and NIIT has the necessary skills to grow in this area. With the demand for software professionals growing by the day, NIIT is bound to make a killing here," says a Mumbai-based analyst.

Meanwhile, the company's net profits for Q4 ending September 30, 2000 stood at Rs 9.12 million, up 70 per cent from Rs 5.35 million for the corresponding period last year.

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