NIIT's decent performance, implying a triple-fold jump in net profit, provided the stimulus for the scrip's early spurt on Monday.

NIIT gained ground in the early trading sessions after the company put up a decent performance for the quarter ended 31 March 2003.

In fact, the scrip was unusually buoyant, jumping 9.65% to Rs 107.90 by 9:56 IST. By that time, it recorded volumes of 99,944 shares on BSE. On Thursday, the NIIT stock closed 2% lower at Rs 98.

After market hours on Thursday (17 March 2003), NIIT announced that, for the second quarter ended 31 March 2003, it posted a net profit of Rs 6.36 crore on a total income of Rs 96.54 crore. On a consolidated basis NIIT posted a net profit of Rs 5.40 crore on net sales of Rs 182.10 crore (Rs 1.82 billion).

The performance at the net level proved better than market expectations of around Rs 2.2 crore PAT (on a consolidated basis) for the quarter. Notably, both the software as well as learning businesses recorded growth during the second quarter.

NIIT recorded a 250-basis-points improvement in operating margins to 12% (from 9.5% in the corresponding previous period). With a decent top line growth and improvement in margins, operating profit jumped 44% to Rs 21.8 crore.

Other income was up 59% to Rs 2.7 crore. Depreciation climbed 16% to Rs 19.6 crore. Profits before tax were Rs 4.9 crore as against a loss of Rs 1 million in the corresponding previous period. During the quarter, the company provided Rs 1.8 crore (provision of Rs 1.4 crore) for diminution in the value of investments. Further, the company wrote back Rs 2.3 crore on account of deferred taxation (as against provision of Rs 1.1 crore in the corresponding previous period). At the net level, the company turned around and made a profit after tax of Rs 5.4 crore as against a loss of Rs 2.6 crore in the corresponding previous period.

NIIT has three segments namely - learning solutions, software services and systems integration and product distribution.

For the second quarter ended March 2003, the learning solutions division posted 10% y-o-y rise in sales to Rs 55.9 crore. Further, control on costs helped this segment to post a 23% increase in operating profits to Rs 7.6 crore. On the other hand, the software services business recorded a 24% y-o-y rise in revenues to Rs 119.8 crore (Rs 1.19 billion). OP was up 28% to Rs 23.2 crore. This represented an 8% rise in sales and 24% rise in OP on a sequential basis.

NIIT had earlier reduced its focus on the SI & PD business and as a result, this segment posted a 44% fall in revenues to Rs 6.4 crore. However, the improved cost structure of this segment led to a 180% rise in OP to Rs 2.8 crore. Notably, this segment had recorded a loss of Rs 2.9 crore in the quarter ended December 2002.

NIIT Technologies continued to pursue its strategy of acquisitions to strengthen its capabilities and provide customers with better, faster and more competitive solutions. The most recent of these was the acquisition of US based CognitiveArts that signified NIIT's focus on bridging the key technology gaps in the knowledge solutions practice of NIIT Technologies. This acquisition enables NIIT to leverage the strong brand presence of CognitiveArts in the US and access its Fortune 500 customers. Its strengths in the retail & financial services verticals are well aligned to the vertical focus of NIIT Technologies. It gives access to the US corporate knowledge solutions market.

Fresh order intake for NIIT Technologies, the software division of NIIT, was $40 million, a growth of 6.7% sequentially. This is the seventh consecutive quarter when the order intake has witnessed a sequential growth. Fresh order intake comprised of $30.5 million ($14.2 million) from USA, $6.4 million ($17.6 million) from Europe, $1.7 million ($5 million) from APAC and the balance $1.4 million ($0.7 million) from India.

Pending orders as on 31 March 2003 amounted to $ 108 million ($ 95.2 million as on 31 December 2002). Out of this, $62.1 million ($45.9 million) was from the US, $27.5 million ($28 million) from Europe, $12.3 million ($14.3 million) from APAC and the balance $6 million ($7 million) from India.

While offshore contributed 51.5% (52.2%) of revenues, onsite contributed 48.5% (47.8%) of revenues for the quarter ended March 2002. Capacity utilisation was 70.8%, up from 70% in the quarter ended December 2002. The Top 5, Top 10 and Top 20 customers contributed 23.4%, 36.2% and 54.4% respectively during the quarter as compared to 21.5%, 33.3% and 50% respectively during the quarter ended December 2002.

During the quarter, NIIT Technologies added 13 new customers (10 in the quarter ended December 2002) including 2 Fortune 500 customers. Out of this, 6 (2) were from USA and 7 (8) were from Europe.

Talking about the future, chief operating officer P Rajendran said, "We expect to enhance our customer loyalty through the unique B Sc (IT) and M Sc (IT) programmes, create a steady intake into the career programs and address an entirely new market by offering the Planetworkz courses through 150 education centres next quarter. Q3 will also see the launch of eGurucool products from NIIT centres."

The current equity capital of NIIT is Rs 38.65 crore. Out of this, promoters hold 31.3% as on 31 March 2003 (30.72% as on 31 December 2002).

BSE code: 500304