NIIT Technologies, an IT solutions company, reported a 34.9% increase in its consolidated revenue for the year-ended March 2011 over that of the previous year at Rs 1,232.3 crore.The net profit of the company increased by 44.2% to Rs 182.2 crore.
The company has declared Rs 7.5 per equity share as dividend. The management is confident of improving margins on the back of its non-linear initiatives. NIIT Technologies is among the few midcap IT companies, which has shown tremendous consistency in their earnings performance in the last few quarters. It has shown a 9.4 per cent compounded quarterly growth rate (CQGR) in revenues and a 7.2 per cent CQGR in net profit.At the current market price of Rs 194 the stock is trading at a PE multiple of just 6.3. The dividend yield at current market price works out to approximately 4% which is far more than the average dividend yield of other IT companies.
Considering the improved business outlook, lower valuation, high yield and several non-linear initiatives taken by the company, we think that NIIT technologies can be bought on declines with a 1 year target return of at least 50% from the current levels.
Stock touched Rs. 241 today. An appreciation of around 25% in 2 months over the recommended price of Rs. 194.
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