Draft 2 - Research almost complete.
With the default & demise of Educomp, Everonn's of world, the entire education sector is put into RIP state in Indian stock markets. As you know, multibaggers always bud in the demolished mud but never in hot bed. Skill India, Digital India, Make in India & above all NaMo!—all will have huge relevance with training, and hence with the undisputed training market leader in India—NIIT. NIIT has the widest range of offerings and the widest reach in the market. There's no doubt that next decade will belong to technology, education and application. The NIIT stock also was in terrible downtrend over last five years, but of-late over last 6 months it's attempting a turnaround.
NIIT is a provider of global information technology (IT) learning solutions. The company was incorporated in 1981; currently the company offers learning solutions to individuals, enterprises and institutions across 40 countries.
NIIT offers training solutions in area of IT, business process outsourcing (BPO), banking, finance and insurance, executive management education, and communication and professional life skills.
The company operates the largest learning content development facility in the world with capacity of reaching 5 million learners every year.
The company has created brands like Edgeineers, e guru, element k, Evolv, Globalnet+, GNIIT, HiWEL, ifbi, Imperia, litmus, Swift and Uniqua.
NIIT has alliances with global leaders such as Adobe, Cisco, Citrix, EMC, Intel, Microsoft, Oracle, SAS, Sun and provides training on their platforms. For its academic alliance, the company has collaborated with 100 leading educational institutes across India, China, New Zealand, UK, Malaysia, Australia, USA, Canada and Ireland.
NIIT’s Institute of Finance Banking and Insurance (IFBI) is been launched in partnership with various leading financial institutions such as ICICI Securities, HDFC Bank, Kotak Mahindra Bank, Yes Bank, ICICI Lombard and Infosys (Finacle).
The company is also forming alliances with various Government organisations to launch training programs.
NIIT’s school learning solutions offers IT program that has trained nearly 7.8 million students in over 9,500 government and private schools. NIIT has invested Rs.50 Cr in a data centers for its cloud campus. Now 222 NIIT centers in India are cloud enabled with 96 courses on cloud. This solves the traditional challenges with franchise based training. NIIT has introduced six new programmes for graduates and final year students in area of Java, .Net developers, Web 2.0., creative publishing, systems and networking, business intelligence and data warehousing. These job-ready courses with be completed in duration varying from 99 days to up to 200 days.
Super Star MTS:This is NIIT's specialty offering of Knowledge Process Outsourcing to big corporations.Leave out all other part and points of this note. Consider only this. THE SINGLE MOST IMPARTANT REASON WHY I LIKE NUT IS: THE FANTASTIC GROWTH & EMERGENCE OF MTS (Managed Training Services).Just have a look at the NITS Revenue growth over four year period, after NIIT exited Element K:
FY2011 - Rs.85.2 crores
FY2012 - Rs.154.4 crores
FY2013 - Rs.217.4 crores
FY2o14 - Rs.314.8 crores
That is a 4 year CAGR of 60%. Amazing!
Even in first half of this fiscal FY15, the same momentum was maintained. In Hi.FY2015, MTS revenue is Rs.2o5.5 crores against Rs.135.5 crores in H1.FY2014 - that is a 52% growth Y-o-Y.NIIT is serving 23 global MTS clients now against 6 in 2011. The client list includes Wal-Mart, Philips, Kit, Shell, Metlife, Allstate Business Insurance (ABI) etc.If this superior growth momentum of high margin MTS gets maintained in future—which is highly likely—NUT will be a sure shot multibagger, even if all other businesses remains low.Here, Mr.Ed Trolley, The Vice President of MTS (Managed Training Services) for NIIT's Learning Solutions for Enterprises business deserves a special mention HE IS WIDELY RECOGNIZED FOR HAVING STARTED THE TRAINING OUTSOURCING INDUSTRY—IN THE SAME LENGTH OF NIIT'S PROMOTER RAJENDRA PAWAR IS CREDITED FOR THE CREATION OF WHOLE NEW IT TRAINING INDUSTRY IN INDIA. (In 2002, Ed was named as one of the "100 Superstars of HR Outsourcing" by HRO Today magazine and in 2007, was recognized as one of the industry's top 20 most influential people in training by TrainingIndustry.com. He is the co-author of the seminal book, Running Training Like A Business: Delivering Unmistakable Value).
Awards
NIIT was ranked among the ‘Top 20 Companies in the IT Training Industry’ in 2008 by TainingOutsourcing.com.
NIIT ranked as the 4th best company to work for in 2013 among 550 companies in 220 industries in India.
NIIT was acknowledged for its innovation in ICT in Education by UNESCO in 2008.
NIIT’s brand HiWEL received ‘Digital Opportunity Award’ by World Information Technology Services Alliance (WITSA) in 2008.
QUALITY MANAGEMENT:The management is top class. Very high disclosure standards. Oflate, they are getting much focused on returns, margins and cash floves.Infact the trio of Rajendra Pawar, Vijay Thadani & S.Rajendran are credited with creating the whole new industry segment of IT training in India. And their innovations in franchising is the key to the success of MIT as a power brand. Pawar was awarded the Padma Bhushan by the President of India in 2011.MIT recently appointed Rahul Keshav Patwardhan—a 20 year old hand at the Group—as CEO designate. He will take charge on April 1 next year.Promoters holding is 34.19%. The Flis holding of 10% currently, is the lowest for them in many years. Dlis hold another 15%. Low institutional holdings is a quality I like!
LIBERAL DIVIDENDS:This one is another very important criterion for my liking of NUT.In terms of dividend pay-out policy, both the listed group companies MIT and MIT Tech ranks among the top most liberal payers in India. Also dividends are steadily increasing.With cash flows of MIT is about to steadily increase in future for various reason discussed throughout this note, the company will go for hilarious dividends going forward.Dividends are even more important in the soon coming declining interest rate regime.
BALANCE SHEET - CLEAN & STRONG:B/S was substantially deleveraged following Element K selling. Fixed assets share of total assets is now reduced to 25% in FY2014 from 52% in FY2010, indicates the company going asset light consciously.Very low, negligible debt levels. Net debt to equity is 0.2.Strong focus on collections leads to improvement in debtor days. Decreasing trend in receivables. Steadily increasing trend in cash flows indicates MIT HAS ALL THE MAKINGS OF A HUGE CASH COW.
NIIT's numbers are still not in pink of health. Consolidated NIIT is positive in operational level but still in red at net level. They are showing profits by consolidating the share of profits from associates (mainly MIT Tech)—using the Equity Method of Accounting. But I hope: THIS YEAR WOULD MARK THE YEAR OF TRANSITION FOR NIIT. At CMP of Rs.52, it seems a deep value, low risk, high reward type of investment! Off course, THIS IS S STOCK ONLY FOR PURE LONG TERM INVESTORS.
Also buy NIIT TECH ~ Both these purely for long term.
With the default & demise of Educomp, Everonn's of world, the entire education sector is put into RIP state in Indian stock markets. As you know, multibaggers always bud in the demolished mud but never in hot bed. Skill India, Digital India, Make in India & above all NaMo!—all will have huge relevance with training, and hence with the undisputed training market leader in India—NIIT. NIIT has the widest range of offerings and the widest reach in the market. There's no doubt that next decade will belong to technology, education and application. The NIIT stock also was in terrible downtrend over last five years, but of-late over last 6 months it's attempting a turnaround.
NIIT is a provider of global information technology (IT) learning solutions. The company was incorporated in 1981; currently the company offers learning solutions to individuals, enterprises and institutions across 40 countries.
NIIT offers training solutions in area of IT, business process outsourcing (BPO), banking, finance and insurance, executive management education, and communication and professional life skills.
The company operates the largest learning content development facility in the world with capacity of reaching 5 million learners every year.
The company has created brands like Edgeineers, e guru, element k, Evolv, Globalnet+, GNIIT, HiWEL, ifbi, Imperia, litmus, Swift and Uniqua.
NIIT has alliances with global leaders such as Adobe, Cisco, Citrix, EMC, Intel, Microsoft, Oracle, SAS, Sun and provides training on their platforms. For its academic alliance, the company has collaborated with 100 leading educational institutes across India, China, New Zealand, UK, Malaysia, Australia, USA, Canada and Ireland.
NIIT’s Institute of Finance Banking and Insurance (IFBI) is been launched in partnership with various leading financial institutions such as ICICI Securities, HDFC Bank, Kotak Mahindra Bank, Yes Bank, ICICI Lombard and Infosys (Finacle).
The company is also forming alliances with various Government organisations to launch training programs.
NIIT’s school learning solutions offers IT program that has trained nearly 7.8 million students in over 9,500 government and private schools. NIIT has invested Rs.50 Cr in a data centers for its cloud campus. Now 222 NIIT centers in India are cloud enabled with 96 courses on cloud. This solves the traditional challenges with franchise based training. NIIT has introduced six new programmes for graduates and final year students in area of Java, .Net developers, Web 2.0., creative publishing, systems and networking, business intelligence and data warehousing. These job-ready courses with be completed in duration varying from 99 days to up to 200 days.
Super Star MTS:This is NIIT's specialty offering of Knowledge Process Outsourcing to big corporations.Leave out all other part and points of this note. Consider only this. THE SINGLE MOST IMPARTANT REASON WHY I LIKE NUT IS: THE FANTASTIC GROWTH & EMERGENCE OF MTS (Managed Training Services).Just have a look at the NITS Revenue growth over four year period, after NIIT exited Element K:
FY2011 - Rs.85.2 crores
FY2012 - Rs.154.4 crores
FY2013 - Rs.217.4 crores
FY2o14 - Rs.314.8 crores
That is a 4 year CAGR of 60%. Amazing!
Even in first half of this fiscal FY15, the same momentum was maintained. In Hi.FY2015, MTS revenue is Rs.2o5.5 crores against Rs.135.5 crores in H1.FY2014 - that is a 52% growth Y-o-Y.NIIT is serving 23 global MTS clients now against 6 in 2011. The client list includes Wal-Mart, Philips, Kit, Shell, Metlife, Allstate Business Insurance (ABI) etc.If this superior growth momentum of high margin MTS gets maintained in future—which is highly likely—NUT will be a sure shot multibagger, even if all other businesses remains low.Here, Mr.Ed Trolley, The Vice President of MTS (Managed Training Services) for NIIT's Learning Solutions for Enterprises business deserves a special mention HE IS WIDELY RECOGNIZED FOR HAVING STARTED THE TRAINING OUTSOURCING INDUSTRY—IN THE SAME LENGTH OF NIIT'S PROMOTER RAJENDRA PAWAR IS CREDITED FOR THE CREATION OF WHOLE NEW IT TRAINING INDUSTRY IN INDIA. (In 2002, Ed was named as one of the "100 Superstars of HR Outsourcing" by HRO Today magazine and in 2007, was recognized as one of the industry's top 20 most influential people in training by TrainingIndustry.com. He is the co-author of the seminal book, Running Training Like A Business: Delivering Unmistakable Value).
Awards
NIIT was ranked among the ‘Top 20 Companies in the IT Training Industry’ in 2008 by TainingOutsourcing.com.
NIIT ranked as the 4th best company to work for in 2013 among 550 companies in 220 industries in India.
NIIT was acknowledged for its innovation in ICT in Education by UNESCO in 2008.
NIIT’s brand HiWEL received ‘Digital Opportunity Award’ by World Information Technology Services Alliance (WITSA) in 2008.
QUALITY MANAGEMENT:The management is top class. Very high disclosure standards. Oflate, they are getting much focused on returns, margins and cash floves.Infact the trio of Rajendra Pawar, Vijay Thadani & S.Rajendran are credited with creating the whole new industry segment of IT training in India. And their innovations in franchising is the key to the success of MIT as a power brand. Pawar was awarded the Padma Bhushan by the President of India in 2011.MIT recently appointed Rahul Keshav Patwardhan—a 20 year old hand at the Group—as CEO designate. He will take charge on April 1 next year.Promoters holding is 34.19%. The Flis holding of 10% currently, is the lowest for them in many years. Dlis hold another 15%. Low institutional holdings is a quality I like!
LIBERAL DIVIDENDS:This one is another very important criterion for my liking of NUT.In terms of dividend pay-out policy, both the listed group companies MIT and MIT Tech ranks among the top most liberal payers in India. Also dividends are steadily increasing.With cash flows of MIT is about to steadily increase in future for various reason discussed throughout this note, the company will go for hilarious dividends going forward.Dividends are even more important in the soon coming declining interest rate regime.
BALANCE SHEET - CLEAN & STRONG:B/S was substantially deleveraged following Element K selling. Fixed assets share of total assets is now reduced to 25% in FY2014 from 52% in FY2010, indicates the company going asset light consciously.Very low, negligible debt levels. Net debt to equity is 0.2.Strong focus on collections leads to improvement in debtor days. Decreasing trend in receivables. Steadily increasing trend in cash flows indicates MIT HAS ALL THE MAKINGS OF A HUGE CASH COW.
NIIT's numbers are still not in pink of health. Consolidated NIIT is positive in operational level but still in red at net level. They are showing profits by consolidating the share of profits from associates (mainly MIT Tech)—using the Equity Method of Accounting. But I hope: THIS YEAR WOULD MARK THE YEAR OF TRANSITION FOR NIIT. At CMP of Rs.52, it seems a deep value, low risk, high reward type of investment! Off course, THIS IS S STOCK ONLY FOR PURE LONG TERM INVESTORS.
Also buy NIIT TECH ~ Both these purely for long term.
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