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1. October 12, 2010
Recommendations <= 1 year 1 - 2 yrs 2 - 5 yrs
NIIT Technologies Ltd BUY Strong Buy
NIIT Technologies which was the software development arm of NIIT Ltd. was spun off as an Buy
Hold
independent company in 2004. Over the years, NIIT Technologies has built its expertise,
Reduce
enhancing its presence in markets such as Application Development and Management and Sell
Strong Buy – Expected Returns > 20% p.a.
Enterprise Solutions including Managed Services and BPO. NIIT Technologies provides an
Buy – Expected Returns from 10 to 20% p.a.
entire gamut of services to its clients including application development and maintenance, Hold – Expected Returns from 0 % to 10% p.a.
Reduce – Expected Returns from 0 % to 10% p.a. with possible
managed services, cloud computing, package implementation and Business Process downside risk
Sell – Returns < 0 %
outsourcing across multiple verticals including Banking & Financial Services, Insurance,
Travel Transport & Logistics and Manufacturing & retail vertical.
For the year ended FY2010, net revenues are down by 6.6% to Rs 9.1bn as compared
STOCK DATA
to FY2009. However due to the cost rationalizing exercise done by the company BSE Code/NSE Code 532541/NIITTECH
Bloomberg Code NTEC:IN
expenditure decreased by 8.6% Y-o-Y to Rs. 7.4bn. EBITDA for the period stood at Rs.
No. of Shares (Mn) 58.8
1.7bn up by 2.3% Y-o-Y. PAT for the period was up by 8.5% Y-o-Y at Rs. 1.26bn. Sensex/Nifty 20250/6103
PRICE DATA
We expect NIIT Technologies net revenues to grow at a CAGR of 19.9% over FY2010- CMP Rs (11th October '10) 209.0
12E to Rs 13.1bn in FY2012 from Rs 9.1bn in FY2010. We further estimate that the PAT Beta 0.9
Market Cap (Rs mn) 12,287
would grow at a CAGR of 10.8% to Rs 1.55bn in FY2012. 52 Week High-Low 219.3/122.75
2W Avg Volume 134,000
Based on a PE multiple of 10xFY12E, the fair value for NIIT Technologies
STOCK RETURN (%)
works out to Rs 264. 30D 3M 6M 1Y
NIIT Technologies 12.5% 18.7% 21.3% 63.6%
Sensex 5.9% 13.1% 14.1% 18.0%
Financial Snapshot
Nifty 6.5% 13.6% 15.3% 19.9%
Projections (Rs mn) FY08A FY09A FY10A FY11E FY12E SHARE HOLDER PATTERN (%)
Net Revenue 9415.1 9799.4 9137.1 11421.4 13134.6 Promoter 39.6%
Institution 29.3%
Y-o-Y Growth (%) 4.1 -6.8 25.0 15.0 Non Institution 31.2%
EBITDA 1762.8 1663.2 1702.5 1942.3 2328.4 Total 100.0%
Y-o-Y Growth (%) -5.7 2.4 14.1 19.9 1 Year Price Performance (Rel. to Nifty)
Profit After Tax 1371.5 1165.0 1263.7 1325.3 1552.0 80%
NIIT Tech Sensex
Y-o-Y Growth (%) -15.1 8.5 4.9 17.1 70%
60%
EPS Rs 23.4 19.8 21.7 22.5 26.4 50%
BVPS Rs 73.0 61.8 98.6 111.9 126.8 40%
30%
EBITDA Margin (%) 18.7 17.0 18.6 17.0 17.7 20%
PAT Margin (%) 14.6 11.9 13.8 11.6 11.8 10%
0%
ROE (%) 32.0 32.1 22.0 20.1 20.8
Dec-09
Oct-09
Aug-10
Oct-10
Apr-10
Jan-10
Nov-09
Feb-10
Sep-10
May-10
Jun-10
Jul-10
Mar-10
-10%
-20%
PERx 8.9 10.5 9.6 9.3 7.9
P/B Ratio 2.9 3.4 2.1 1.9 1.6
Disclaimer: This document is prepared by Fullerton Securities & Wealth Advisors Ltd (FSWA). This document is not for public distribution and has been furnished to you solely for your information and you are notified that you
should not further copy, modify, use or distribute the information in any way unless you obtain written consent from FSWA. The information provided in the document is on the "best effort" basis and is subject to change
depending on several factors, including general market conditions. While reasonable care to compile the document but the accuracy and completeness cannot be guaranteed either by FSWA or any other person or entity
associated with it. The returns shown are merely estimates and forecasts and are not necessarily indicative of future performance and can change without notice. The document is prepared only for your information and is not
sufficient for making an investment decision. You should rely on your own investigations and seek professional advice for investment decision. Neither FSWA nor any person connected with it, accepts any liability either arising
from the use of this document or due to any inadvertent error in the information contained in this document. Financial investments carry risks including principal risk and therefore you should seek professional advice prior to
making any investment decision. The risk of any losses occurring by use of this report or document will be entirely yours. The investments covered in this report are not guaranteed. Also past performance of an investment or
fund is not an indication of future performance. FSWA, its affiliates, or associates, or any regulatory or other body or entity assumes no liability or responsibility for investment results or losses arising out of investment decisions
made by you. This document is not to be considered as an offer to sell or a solicitation to buy any security or financial product. FSWA reserves the right to modify or alter the terms and conditions of the use of this service or
discontinue, temporarily or permanently, the information and services provided (or any part thereof) at any time, with or without prior notice and FSWA shall not be liable to you for any suspension, modification, or termination
of the information and services provided herein. www.fullertonsecurities.co.in Page | 1

2. October 12, 2010
BUSINESS PROFILE
NIIT Technologies which was the software development arm of NIIT Ltd. was spun off as an independent company in 2004,
and has a presence across Banking & Financial Services, Insurance, Travel Transport & Logistics and Manufacturing & retail Non Linear initiatives
verticals. For financial year 2010 the BFSI vertical contributed to 43% of the total revenues followed by the transportation account for 27% of
revenues which would
vertical which contributed to 31% of total revenues. Retail & manufacturing vertical contributed to 11% of revenues while increase to 35% of
other verticals accounted for the balance 15% of revenues. revenues byFY12.
On a Geographical basis EMEA accounted for 43% of revenues while America contributed to 33% of revenues. APAC region
accounted for 13% of total revenues while India accounted for the balance 11% of revenues. The US, APAC and India markets
would drive growth while the Europe region is expected to be sluggish. NIIT Technologies has been of late increasing its focus
on non linear business on account of higher margins. Non linear initiatives account for 27% of revenues which is expected to
increase to 30% and 35% of revenues in FY11 and FY12 respectively.
Key Business Areas
Application Development Management: NIIT Technologies offers a whole range of application development and
management services including application development, application management, application renewal, application testing,
data warehousing & business intelligence and application integration.
Managed Services: NIIT Technologies offers its customers an entire gamut of managed services namely Infrastructure
management services, production support and managed security services. The company provides a wide variety of services
for managing IT infrastructure including remote support for systems and databases, network management, managed desktop
services and data center services. NIIT technologies cloud
computing offerings
Package Implementations: NIIT Tech has over twenty years of experience in global enterprise application deployment and include SaaS, PaaS and
IaaS
management experience across multiple ERP platforms including SAP. The company offers the complete suite of SAP
implementation services across modules for SAP R/3 and mySAP business suite solutions. The company also provides SAP
functional support, SAP production support basis and technical consulting.
BPO: NIIT SmartServe is the BPO arm of NIIT Technologies with broad business expertise in outsourcing. NIIT SmartServe is
currently providing services across multiple verticals including Insurance, Financial Services, Market Research and Direct
Marketing, Real Estate, transportation and Technology verticals.
Cloud Computing: NIIT Technologies offerings in cloud computing offerings can be split across three categories viz. Software
as a Service (SaaS), Platform as a Service (PaaS) and Infrastructure as a Service (IaaS).
Disclaimer: This document is prepared by Fullerton Securities & Wealth Advisors Ltd (FSWA). This document is not for public distribution and has been furnished to you solely for your information and you are notified that you
should not further copy, modify, use or distribute the information in any way unless you obtain written consent from FSWA. The information provided in the document is on the "best effort" basis and is subject to change
depending on several factors, including general market conditions. While reasonable care to compile the document but the accuracy and completeness cannot be guaranteed either by FSWA or any other person or entity
associated with it. The returns shown are merely estimates and forecasts and are not necessarily indicative of future performance and can change without notice. The document is prepared only for your information and is not
sufficient for making an investment decision. You should rely on your own investigations and seek professional advice for investment decision. Neither FSWA nor any person connected with it, accepts any liability either arising
from the use of this document or due to any inadvertent error in the information contained in this document. Financial investments carry risks including principal risk and therefore you should seek professional advice prior to
making any investment decision. The risk of any losses occurring by use of this report or document will be entirely yours. The investments covered in this report are not guaranteed. Also past performance of an investment or
fund is not an indication of future performance. FSWA, its affiliates, or associates, or any regulatory or other body or entity assumes no liability or responsibility for investment results or losses arising out of investment decisions
made by you. This document is not to be considered as an offer to sell or a solicitation to buy any security or financial product. FSWA reserves the right to modify or alter the terms and conditions of the use of this service or
discontinue, temporarily or permanently, the information and services provided (or any part thereof) at any time, with or without prior notice and FSWA shall not be liable to you for any suspension, modification, or termination
of the information and services provided herein. www.fullertonsecurities.co.in Page | 2

3. October 12, 2010
BUSINESS PERFORMANCE
Strong Growth inQ1FY11…
NIIT Technologies reported strong numbers for the quarter ended June 2011 with revenues up by 21.8% QoQ and 33.6% YoY
on account of higher bought out items. Operating profits for the quarter stood at Rs. 541mn an increase of 37.3% YoY. Net USD 149mn of total
firm executable
profits for the quarter stood at Rs. 408mn up by 131.6% YoY. During the quarter the company reported fresh order intake of business over the next
USD 40mn leading to USD 149mn of firm business executable over the next 12 months. During the quarter the company 12 months
added 3 new significant customers in the travel & transport vertical.
14000 Annual Revenue & Margins 40% 3500 25%
Quarterly Performance
12000 35% 3000
20%
30%
Revenue s (Rs mn)
10000 2500
Revenue s (Rs mn)
Margins (%)
25% 15%
Margins (%)
8000 2000
20%
1500 10%
6000
15%
1000
4000
10% 5%
500
2000 5%
0 0%
0 0% Q1FY10 Q2FY10 Q3FY10 Q4FY10 Q1FY11
FY2008 FY2009 FY2010 FY2011E FY2012E
Revenues (Rs mn) PAT Margin (%) EBITDA Margin (%) Revenues (Rs mn) PAT Margin (%) EBITDA Margin (%)
Peer Group Comparison
Revenues EBITDA PAT
Companies P/E P/B CMP ROE %
(Rs mn) Margins % Margins %
NIIT Technologies 9,137.1 18.6 13.8 9.6 2.1 209.0 21.8
Mastek 7,138.2 12.2 9.5 9.9 1.2 249.2 12.4
Zensar Technologies 9,527.6 18.7 13.4 5.9 2.1 160.9 38.7
FY10 Consolidated Figures Used
Peer Comparison
Mid Cap IT companies
We believe that large cap IT stocks have witnessed a sharp run up while the mid cap stocks have underperformed are trading at a
significantly. The valuation gap between the large cap and mid cap IT stocks are too large. We feel that this is likely to significant discount
to the large Caps.
change in the near future on the back of improving outlook for the industry. NIIT Technologies enjoys one of the highest
operating margins in the mid cap segment and we believe that the stock is due for a re rating in the near future.
Disclaimer: This document is prepared by Fullerton Securities & Wealth Advisors Ltd (FSWA). This document is not for public distribution and has been furnished to you solely for your information and you are notified that you
should not further copy, modify, use or distribute the information in any way unless you obtain written consent from FSWA. The information provided in the document is on the "best effort" basis and is subject to change
depending on several factors, including general market conditions. While reasonable care to compile the document but the accuracy and completeness cannot be guaranteed either by FSWA or any other person or entity
associated with it. The returns shown are merely estimates and forecasts and are not necessarily indicative of future performance and can change without notice. The document is prepared only for your information and is not
sufficient for making an investment decision. You should rely on your own investigations and seek professional advice for investment decision. Neither FSWA nor any person connected with it, accepts any liability either arising
from the use of this document or due to any inadvertent error in the information contained in this document. Financial investments carry risks including principal risk and therefore you should seek professional advice prior to
making any investment decision. The risk of any losses occurring by use of this report or document will be entirely yours. The investments covered in this report are not guaranteed. Also past performance of an investment or
fund is not an indication of future performance. FSWA, its affiliates, or associates, or any regulatory or other body or entity assumes no liability or responsibility for investment results or losses arising out of investment decisions
made by you. This document is not to be considered as an offer to sell or a solicitation to buy any security or financial product. FSWA reserves the right to modify or alter the terms and conditions of the use of this service or
discontinue, temporarily or permanently, the information and services provided (or any part thereof) at any time, with or without prior notice and FSWA shall not be liable to you for any suspension, modification, or termination
of the information and services provided herein. www.fullertonsecurities.co.in Page | 3

4. October 12, 2010
VALUATION
We expect NIIT Technologies net revenues to grow at a CAGR of 19.9% over FY2010-12E to Rs 13.1bn in FY2012
from Rs 9.1bn in FY2010. We further estimate that the PAT would grow at a CAGR of 10.8% to Rs 1.55bn in Based on a PE multiple of
10xFY12E, the fair value
FY2012. for NIIT Technologies
works out to Rs 264.
We expect margins to contract marginally in FY2011 and then improve in FY12 on the back of increasing share of
non linear initiatives.
Based on a PE multiple of 10xFY12E, the fair value for NIIT Technologies works out to Rs 264.
We recommend a ‘BUY’ rating on the stock.
Financial Analysis and Projection
Particulars (Rs mn) FY2008 FY2009 FY2010 FY2011E FY2012E
Net Revenue 9415.1 9799.4 9137.1 11421.4 13134.6
Expenditure 7652.3 8136.2 7434.6 9479.1 10806.2
EBITDA 1762.8 1663.2 1702.5 1942.3 2328.4
Interest 50.9 31.8 8.4 0.0 0.0
PBDT 1711.9 1631.4 1694.1 1942.3 2328.4
Depreciation 388.8 421.7 358.1 376.0 413.6
Other Income 186.1 179.4 84.8 50.0 75.0
PBT 1509.2 1389.1 1420.8 1616.3 1989.8
Less: Tax 137.7 224.1 144.2 290.9 437.8
Profit After Tax 1371.5 1165.0 1276.6 1325.3 1552.0
Minority Interest 0.0 0.0 12.9 0.0 0.0
PAT after Minority Interest 1371.5 1165.0 1263.7 1325.3 1552.0
PAT Margin (%) 14.6 11.9 13.8 11.6 11.8
EBITDA Margin (%) 18.7 17.0 18.6 17.0 17.7
ROE (%) 32.0 32.1 22.0 20.1 20.8
EPS Rs 23.4 19.8 21.7 22.5 26.4
BVPS (Rs.) 73.0 61.8 98.6 111.9 126.8
FY2011E FY2012E
Valuation Ratios (x)
PERx 9.3 7.9
P/B Ratio 1.9 1.6
Disclaimer: This document is prepared by Fullerton Securities & Wealth Advisors Ltd (FSWA). This document is not for public distribution and has been furnished to you solely for your information and you are notified that you
should not further copy, modify, use or distribute the information in any way unless you obtain written consent from FSWA. The information provided in the document is on the "best effort" basis and is subject to change
depending on several factors, including general market conditions. While reasonable care to compile the document but the accuracy and completeness cannot be guaranteed either by FSWA or any other person or entity
associated with it. The returns shown are merely estimates and forecasts and are not necessarily indicative of future performance and can change without notice. The document is prepared only for your information and is not
sufficient for making an investment decision. You should rely on your own investigations and seek professional advice for investment decision. Neither FSWA nor any person connected with it, accepts any liability either arising
from the use of this document or due to any inadvertent error in the information contained in this document. Financial investments carry risks including principal risk and therefore you should seek professional advice prior to
making any investment decision. The risk of any losses occurring by use of this report or document will be entirely yours. The investments covered in this report are not guaranteed. Also past performance of an investment or
fund is not an indication of future performance. FSWA, its affiliates, or associates, or any regulatory or other body or entity assumes no liability or responsibility for investment results or losses arising out of investment decisions
made by you. This document is not to be considered as an offer to sell or a solicitation to buy any security or financial product. FSWA reserves the right to modify or alter the terms and conditions of the use of this service or
discontinue, temporarily or permanently, the information and services provided (or any part thereof) at any time, with or without prior notice and FSWA shall not be liable to you for any suspension, modification, or termination
of the information and services provided herein. www.fullertonsecurities.co.in Page | 4

5. October 12, 2010
Board Of Directors
Director Name Current Position Description
Rajendra S. Pawar is a well known face in the Indian IT sector. Recognising skilled manpower to be a very
important prerequisite for the survival of the fledgling Indian IT industry, Mr. Pawar helped pioneer the IT
training segment to fuel its growth. Mr. Pawar has won the Ernst & Young Master Entrepreneur of the Year
Mr. Rajendra S. Pawar Chairman & Managing Director
Award in 1999. His contributions to the IT industry in India also earned him the “IT man of the Year” award,
instituted by IT industry journal, Dataquest. Mr. Pawar is a part of a panel of six experts in the newly constituted
Prime Minister’s National Council on Skill Development, chaired by the Prime Minister of India.
Mr. Arvind Thakur is the Chief Executive Officer of NIIT Technologies Ltd., and serves as the Joint Managing
Director on its board. Mr. Thakur graduated in engineering from the Indian Institute of Technology in India.
Thereafter he pursued post graduation in Industrial Engineering from NITIE in Mumbai. He started his career as
Mr. Arvind Thakur Chief Executive Officer
an Industrial Engineer with BHEL, a large engineering corporation with work specialization in systems. He joined
NIIT Ltd. in 1985 as a member of the core team, and has since then been handling key organisational roles. He
was the President of its Software business before it was demerged to form NIIT Technologies Ltd.
Mr. Vijay K. Thadani is a co founder of the NIIT group and is currently the Chief Executive Officer of NIIT Ltd. Mr.
Thadani is currently the Chairman of CII National Committee on Education and also serves as the Chairman of
Mr. Vijay Thadani Director
the National Accreditation Board for Education and Training (NABET). Mr. Thadani is a ‘Distinguished Alumnus’ of
the premier Indian Instituteaof Technology, Delhi. with over 30 years of experience. A specialist in the field of
Mr. Subroto Bharrachrya is Chartered Accountant
Finance and Management Consultancy, he has worked as a part of the core team in several reputed
Mr. Subroto Bhattachrya Director (Independent)
organisations Singh is a retired IAS Officer, who has held very senior positions in the Central and State
Mr. Surendra
Governments. Having joined the Public Service in 1959, Mr. Singh has been Special Secretary to the Prime
Minister of India, responsible for all the economic work in the PMO, Cabinet Secretary to the Government of
India, Secretary to the Council of Ministers and Secretary, Ministry of Industry. He was an Executive Director on
Mr. Surendra Singh Director (Independent)
the board of the World Bank, representing India, Bangladesh, Sri Lanka and Bhutan. He has also held
directorships on the Boards of the International Finance Corporation (IFC) and the Multilateral Investment
Guarantee Agency (MIGA).
Mr. Sharma earned his MBA in International Business from the Wharton School, University of Pennsylvania. Mr.
Sharma also holds a master’s degree in Computer Science from the Moore School, University of Pennsylvania,
Mr. Amit Sharma Executive Vice President
and a Bachelor of Technology in Mechanical Engineering from the Indian Institute of Technology. Mr. Sharma has
previous ly worked with various companies including Motorola, GE Capital, and McKinsey, New York.
Disclaimer: This document is prepared by Fullerton Securities & Wealth Advisors Ltd (FSWA). This document is not for public distribution and has been furnished to you solely for your information and you are notified that you
should not further copy, modify, use or distribute the information in any way unless you obtain written consent from FSWA. The information provided in the document is on the "best effort" basis and is subject to change
depending on several factors, including general market conditions. While reasonable care to compile the document but the accuracy and completeness cannot be guaranteed either by FSWA or any other person or entity
associated with it. The returns shown are merely estimates and forecasts and are not necessarily indicative of future performance and can change without notice. The document is prepared only for your information and is not
sufficient for making an investment decision. You should rely on your own investigations and seek professional advice for investment decision. Neither FSWA nor any person connected with it, accepts any liability either arising
from the use of this document or due to any inadvertent error in the information contained in this document. Financial investments carry risks including principal risk and therefore you should seek professional advice prior to
making any investment decision. The risk of any losses occurring by use of this report or document will be entirely yours. The investments covered in this report are not guaranteed. Also past performance of an investment or
fund is not an indication of future performance. FSWA, its affiliates, or associates, or any regulatory or other body or entity assumes no liability or responsibility for investment results or losses arising out of investment decisions
made by you. This document is not to be considered as an offer to sell or a solicitation to buy any security or financial product. FSWA reserves the right to modify or alter the terms and conditions of the use of this service or
discontinue, temporarily or permanently, the information and services provided (or any part thereof) at any time, with or without prior notice and FSWA shall not be liable to you for any suspension, modification, or termination
of the information and services provided herein. www.fullertonsecurities.co.in Page | 5