Wednesday, January 6, 2010

Stock Idea: NIIT Technologies Ltd

NIIT Technologies Ltd— BUY—178—INR
Sector — Software
Regd.Off.— NIIT House, C-125 Okhla Phase-I, New Delhi, 110020
Listed — NSE, BSE.
Company overview—
NIIT Technologies is a global IT and Business Process Management Services provider, with a presence in 14 countries across the world. NIIT Technologies is a Global IT solutions organization, with its footprint spanning North America, Europe, Asia and Australia. Ranking among India’s Top 20 IT services players, the company offers a gamut of services in the areas of Application Development Management and Enterprise Solutions, encompassing Managed Services and Business Process Outsourcing. Positioning itself as a navigator, the company has been guiding customers in their quest for state-of-the-art IT solutions. The two key values driving business practices at NIIT Technologies are Innovation and Trust, which have helped build enduring relationships with clients. NIIT Technologies focuses on well-defined industry verticals of Finance, Transport, Retail and Manufacturing for its IT solutions business. Company offers services in Custom Software Development, Legacy maintenance and modernization and Enterprise Integration. NIIT Technologies follows global standards in its software development processes that include an ISO 9001:2000 certification from KPMG and assessment at Level 5 of SEI-CMMi. Whether it is global banking and insurance major, ING, leading Asset Management solutions provider, SEI, world retail chain, Marks & Spencer, the Number Two cement manufacturer, Holcim or travel big-wigs, British Airways and Sabre, NIIT Technologies has been able to scale its interactions with these marquee clients into extremely meaningful, multi-year "collaborations."
Products & Services—
Company has specialization in providing solutions to customers in the Insurance, Banking, Transportation, Manufacturing and Retail verticals. Its major global customers include ING Group, SEI Investments, Channel 4, Ministry of Defense, Singapore, Office Depot, Singapore Airlines, Toshiba and Toyota Motors. NIIT Technologies subsidiaries, NIIT SmartServe Limited and NIIT GIS Limited, offer Business Process Management and Geographical Information Systems solutions, respectively. Company has specialization in offering solutions to the Insurance industry in areas of Insurance Management Consulting, Insurance Systems Consulting, Insurance Software Frameworks and Services, Insurance Business Process Outsourcing, and Training Solutions for the Insurance industry. It provide services in application development and management in legacy, client-server, Web and wireless technologies, integration solutions, data warehousing solutions, testing services, legacy applications re-engineering, package services and managed services.
NIIT Technologies focuses on distinct industry verticals including Finance, Transport, Retail and Manufacturing. In Finance, it offers solutions to the insurance, asset management and banking sectors. It has a suite of solution frameworks focused on the insurance sector. In transportation, it has handled diverse projects for leading airlines, land transport authorities and railways. In retail industry company focuses on providing development and maintenance services for retailing systems and offering out-of-the-box retail industry solutions. In Manufacturing, it provides SAP solutions for the SMB segment. It also executed diverse projects for clients in the manufacturing and automotive, education, government and public enterprise, media and publishing and telecom sectors.
NIIT Technologies has alliances with global IT majors including IBM, Microsoft, SAP, Siebel and Sun. As part of its inorganic growth strategy NIIT has made significant acquisitions. Osprey, USA-a specialist in SAP solutions, DEI-an Insurance industry solutions provider, AD Solutions a company with a strong presence in Germany, Austria and Switzerland.
Company has following joint ventures-
NIIT GIS Ltd. - NIIT Technologies has been partnering with global GIS leader, ESRI Inc. USA since 1985, when it began reselling and supporting its immensely popular ArcInfo software. In 1996, the collaboration evolved into a strategic relationship, with a new joint venture, NIIT GIS Ltd. getting formed to address the burgeoning GIS market in the country.
Adecco-NIIT Technologies Pvt. Ltd. - NIIT Technologies has entered into a partnership with Adecco S.A., a Fortune 500 company and world leader in Human Resource services Adecco-NIIT Technologies Pvt. Ltd. The Zurich, Switzerland headquartered Adecco is leveraging NIIT Technologies’ dual-shore delivery model — a blend of onsite and offshore services — to deliver a high Return on Investment to clients spread across the world. Committed to achieving process excellence, the joint venture has deployed NIIT Technologies’ Quality Management System (QMS).
Recent Developments—
In Nov, Company has partnered with Hitachi Information Systems, a leading provider of IT infrastructure services in Japan to offer services in cloud computing. Cloud computing is an emerging mega trend which is standardized IT capability delivered via the internet in a pay-per-use and self-service manner. NIIT Technologies pursuing its non-linear services model of business is an early entrant in this space. Through this partnership NIIT Technologies and Hitachi Information Systems will provide unmatched value based on the strengths of both companies.
Company wants to establish its presence among the top players in its selected segments by operating in the integrated IT Services and Business Process Management areas. At current market price, stock is trading at attractive valuation of 9.95 P/E multiple of its FY 2010 estimated EPS. We recommend investors to buy "NIIT Technologies Ltd." with medium to long-term investment horizon.
Source: Internet (Valuenotes by Abhishek Jain)

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