NIIT Underperforms In All Its Segments In Q4FY13

NIIT announced its Q4FY13 results on May 23, 2013. The company saw a decline in revenues but some improvement in its profitability, although it continues to remain loss-making. Overall, the result was disappointing and caused a downfall in the stock prices to the extent of 3.5% post the announcement.

In Q4FY13, the revenues of NIIT declined by 4.77% to Rs 221.6 crore on a sequential basis. Weakness was seen in three of the four segments that the company operates in. Revenues from CLS (Corporate Learning Solutions), SLS (School Learning Solutions) and ILS (Individual Learning Solutions) declined by 3.91%, 5.62% and 5.13% respectively on a sequential basis.

During the quarter, the EBITDA from the three aforementioned segments declined by 13.68%, 2.63% and 29.41% respectively. This led to a 7.79% drop in the overall EBITDA and saw the EBITDA margins shrinking by 11 basis points to 3.20%.

Its fourth segment, SBS (Skill Building Solutions), was the only one to post good results. The revenues of this segment moved up by 33.33% and the EBITDA grew by 14.29%. However, since this segment contributes to a mere 0.2% of the total revenues, its performance made hardly any difference to the overall results.

The slowdown at NIIT can be prominently seen in places other than its financials. In the CLS business, NIIT added 1 MTS (Managed Training Services) customer in Q4FY13 as compared to 3 in the previous quarter. Its order intake reduced to USD 14.3 million from USD 21.5 million in Q3FY13.

The company has been making efforts to maintain growth by introducing new platforms and upgrading its offerings. It has taken its cloud-based offerings across its four platforms of growth – Managed Training Services, NIIT Nguru, NIIT Yuva Jyoti and Cloud Campus. However, there is a noticeable slowdown in all the segments that the company operates in. We recommend investors to avoid the scrip till there are signs of improvement in the operations of NIIT.