NIIT (NIITLTD) Q4 18/19 earnings summary

Executive summary

• FY19 consolidated revenue rose 7% YoY to Rs. 9,102m and PAT increased 38% to Rs. 864m; revenue grew 9% excluding businesses under planned defocus.

• Corporate Learning Group (CLG) was the main growth engine, contributing 69% of revenue versus 61% in FY18; Skills & Careers (SNC) and School Learning (SLG) returned to YoY growth in Q4.

• Sale of the entire stake in NIIT Technologies closed May 17, 2019 for Rs. 20,204m cash; proceeds were earmarked for growth investment and shareholder returns, subject to costs, taxes, debt repayment and reserves.

Financial highlights

• Consolidated revenue Rs. 9,102m, +7% YoY; EBITDA Rs. 842m, +13%; EBIT Rs. 482m, +40%; PAT attributable to equity holders Rs. 864m, +38%.

• Basic EPS Rs. 5.18 versus Rs. 3.76; consolidated net profit margin 9.5% versus 7.3%.

• Consolidated PBT was Rs. 197m before associate profit; share of associate profit was Rs. 946m, while tax expense was Rs. 271m, including Rs. 183m deferred tax on associate profits.

• Exceptional items were a net expense of Rs. 20.31m versus Rs. 6.84m income in FY18; FY19 included provisions and China-related costs, offset by reversals of doubtful-debt provisions and old liabilities.

• Operating cash flow was Rs. 443m versus Rs. 880m; cash and cash equivalents ended at Rs. 1,007m versus Rs. 1,090m.

Outlook and guidance

• CLG expected to accelerate over coming years on USD 245m revenue visibility, existing run rates and larger annuity MTS contracts; plans include investment in innovation, advisory services and sales and marketing.

• RECO course delivery was expected from Q2 FY20, with revenue accruing from September 2019 and supporting a higher CLG run rate in H2 FY20.

• SNC aimed to return to near-term growth through StackRoute, TPaaS, deep-skilling and expanded career programs, with India and China as focus markets.

• SLG planned to focus on asset-light, IP-driven private-school products, but remained cautious on near-term investment due to regulatory uncertainty.