Coforge Ltd. share price target

US$ revenues increased 4.4% QoQ to $114.8 million, slightly better than our estimate of $113.1 million Rupee revenues increased 4.0% QoQ to | 737.2 crore and were...

segment, which now contributes 23% of overall business. No surprise on profitability barring lower tax: GPM of 35% (-40bp QoQ), SGA of 18.9%. (-90bp) and consequently EBITDA of 16.1% (+50bp) were all in line driving SGA-led margin uptick in 2QFY18. PAT increased 31% QoQ to INR671m (est. of INR643m), led by a 21.8% tax rate in 2Q v/s 34.7% in 1Q. Strong commentary on deals, but soft on couple of segments: NITEC expects to close at least two large deals in 3Q, defined as TCV of USD20m+. However, softness in Government business in GIS and also in Morris JV due...

ICICI Securities Ltd | Retail Equity Research US$ revenues declined 0.6% QoQ to $109.9 million (including oneoff gain of US$ 4 million in Q4FY17) in line with our expectation of $109.2 million. While excluding one-off gain, revenue grew 3.2% sequentially. In constant currency, revenues grew 1.4% sequentially on account of seasonality in GIS...

In rupee term, revenues increased 7.4% QoQ to | 743.1 crore, above our 4.0% QoQ increase and | 720.2 crore estimate. During the quarter, the company received exceptional part payment against settlement of a government contract, which was put on hold resulting in revenue recognition of | 27.1 crore for services contracted. Barring this, revenues grew 3.4% QoQ to | 716 crore At 20.8%, EBITDA margins rose 320 bps QoQ, above our 17.2% estimate. Adjusting for exceptional items, EBITDA margin was 17.9%...

ICICI Securities Ltd | Retail Equity Research NIIT Tech reported in line dollar revenue growth while margins surprised on the upside by ~70 bps. US$ revenues declined 0.4% QoQ to $102.7 million, in line with our $102.3 million estimate In rupee terms, rupee revenues grew 0.1% QoQ to | 692.2 crore, above our 0.3% QoQ decline and | 689.5 crore estimates At 16.9%, EBITDA margins grew 70 bps QoQ and were above our 16.2% estimate led by higher revenues from offshore...

Background: NIIT Technologies a leading global IT solutions organization. In 3QFY17: Revenue share by service mix: Application Development & Maintenance (67%), System integration & Package implementation (4%), Managed service (17%), IP assets (7%) & BPO (5%) segments. Vertical mix: BFSI (42%), Transportation (32%), Manufacturing, Med & others (26%). Geography mix: America (48%), EMEA (34%), and ROW (18%). Company has total headcount of...

In rupee term, rupee revenues grew 3.3% QoQ to | 691.3 crore, in line with our 3.2% QoQ increase and | 690.3 crore estimates (average rupee realised: 66.86 vs. 66.96 assumed) At 16.2%, EBITDA margins grew 90 bps QoQ, largely in line with our 16.5% estimate led by higher revenues & lower SG&A; expenses Reported profit of | 59.6 crore was below our | 65 crore estimate due to increase in provision of tax (24.2% of PBT vs. 10.3% in Q1) Q3 expected to be soft but H2FY17E expected to be better...

In 4QFY16, NIIT Tech revenue stood at INR 6,847mn (up 12.0% YoY and +0.9% QoQ). Revenue declined in dollar terms by 1.6% QoQ to USD 101.7mn. In CC terms, revenue growth was flat QoQ. Growth was soft due to closure of large projects in travel and transportation vertical. EBITDA margins expanded by 20bps QoQ at 18.4% in 4QFY16, driven by healthy increase in GIS business, lower SG& A expenses and currency tailwinds. PAT margin rose by 60bps QoQ on the back of lower effective tax rate in 4QFY16. DSO declined by 10 days QoQ to 80 days.The company’s order book, executable over the next 12 months was flat at USD 301mn. During the quarter NIIT added 4 clients, 2 each in USA and RoW and received fresh order intake of USD 120mn (US: USD 30mn, EMEA: USD 61mn and RoW USD 28mn).

Valuation: Management expects the growth momentum to pick up in the remaining quarters and has guided for double digit growth in FY17 aided by healthy order bookings and traction in digital business. However, management indicated that 1QFY17E is likely to be soft quarter due to seasonality in its GIS business. The stock is currently trading at 10.5/9.1/8.2x of FY16/17E/FY18E EPS. We have arrived at a target price of INR 588 (earlier 564), valuing the stock at 10X FY18E EPS and maintain a BUY rating on the stock.