In a surprising turn of events, NIIT’s stock price has surged by a remarkable 56% in September, significantly outperforming the equity benchmark Sensex, which has only gained about 5% over the same period. This upward momentum comes after three consecutive months of losses, where the stock faced a severe drop of nearly 79% in June, followed by modest declines of 2% in both July and August.
While the recent three-month trend showcases a substantial 44% gain, a broader perspective over six months reveals a contrasting story, with the stock experiencing a notable decline of over 64%.
On the most recent trading day, the stock saw a 5% decline on the BSE, following a 6.62% loss in the previous session.
Fundamental Views:
- Shivani Nyati, Head of Wealth at Swastika Investmart, attributes NIIT’s recent market surge to the company’s demerger, innovative expansion strategies, fresh business models, and engaging approaches to student enrollment for NIIT courses. The acquisition of the remaining 10% stake in RPS Consulting and management’s guidance of emerging from a negative growth cycle have also fueled investor confidence.
- Dhruv Mudaraddi, Research Analyst at StoxBox, highlights NIIT’s recent run-up due to the Chairman and Founder’s reaffirmation of the company’s future prospects, particularly its plans to expand into sectors focused on artificial intelligence (AI) talent. With an ambitious revenue target of ₹1,200 crore by FY27-28 and substantial cash reserves earmarked for potential mergers and acquisitions, NIIT appears well-positioned. However, Mudaraddi suggests waiting for execution and monitoring IT sector hiring trends before making further investment decisions.
- CA Vatsal Vinchhi, Equity Analyst specializing in the IT sector at Choice Equity Broking, notes NIIT’s demerger from NLSL and the 4% YoY revenue growth in Q1FY24. The company aims for a positive EBITDA margin by the end of FY24 and is investing in AI skill development. It is also exploring opportunities in supply chain management and new manufacturing services, with a revenue target of ₹1,200 crore by FY27E-28E. Vinchhi recommends investors stay invested for the medium to long term, buying on dips depending on the company’s performance.
Technical Views:
- Vaishali Parekh, Vice President of Technical Research at Prabhudas Lilladher, observes NIIT’s rapid ascent above the previous resistance level of ₹150. She cautions that the indicators are in the highly overbought zone, suggesting potential profit booking. The near-term support is expected around ₹128-130, with further upside confirmed by breaching the ₹154 level.
- Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers, notes that NIIT is trading near its historical peak at ₹149. While major exponential averages are well below the current price, monthly stochastics are not yet overbought. Patel advises booking profits and avoiding fresh long positions.
In conclusion, NIIT’s recent stock performance has been remarkable, but experts are cautious about the potential for profit booking and advise investors to monitor the company’s execution and industry trends closely before making investment decisions.
