Below is a verbatim transcript of the interview
Q: We understand that the company met few analysts and the take away has been that the company has set an aspirational target to grow revenues to USD 1 billion in the next five years. Could you walk us through how the company plans to achieve it and if there will be any acquisition in order to reach that?
A: If you have been looking at the growth of the company in the last three years, we have come out very strong from the slowdown and our compound annual growth rate (CAGR) has been close to 30 percent in the last three years and even if I look at it in dollar terms, its been about 22-23 percent in the last three financial years. Therefore, that gives the confidence of driving growth in the organisation and looking at an aspirational goal of USD 1 billion going forward.
In the last three years, the western markets have been somewhat subdued and lot of our growth has come from Asia, India and the domestic markets. But, going forward, we are seeing a slight uptrend in the US while the emerging economies like India is facing a weaker growth. Therefore, our focus would be very sharply on those developed markets particularly the US as we go forward. That will be one aspect of growth strategy.
The other is: we will be looking at large engagements as we go forward and large engagements typically involve significant amount of infrastructure management services which is a strong practice in the organisation. So, we will strengthen that practice as we go forward and drive the company on its growth path.
Q: Would some of this growth in that case come at the risk of lower margins. Would you be prepared to let some of the margins go in order to acquire topline?
A: If you look at the revenue mix of the company, it's been equally distributed across all geographies and we have a significant amount of revenues coming from Asia particularly the domestic market. Therefore, as we start focusing and getting more revenues out of the US and western markets, it's going to boost our margins as we going forward.
Q: What about acquisition. Will that be one of the roots by which you will reach USD 1 billion by way of revenues?
A: Inorganic initiatives are strong pillars of our growth strategy. However, the company's activities in the last couple of years, we have been doing transactions at regular intervals and as we look at the business, it is becoming more and more imperative that certain amount of inorganic initiative is important to sustain the growth momentum. So, primarily our inorganic initiatives would be in strengthening the industry segments that we are focused on.
Q: Have you short-listed; are you scouting for an acquisition right now?
A: Our focus is on strengthening the industry segments where we are strong and they are particularly in the insurance and the travel space. These are two sectors where we have critical mass. Therefore, our assets which we like to integrate would predominantly be in these segments. Yes, we are constantly on the lookout and in conversation with the potential assets that we can integrate in the organisation.
NIIT Tech stock price
On December 05, 2013, NIIT Technologies closed at Rs 330.50, down Rs 6, or 1.78 percent. The 52-week high of the share was Rs 341.90 and the 52-week low was Rs 234.25.
The company's trailing 12-month (TTM) EPS was at Rs 38.49 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 8.59. The latest book value of the company is Rs 126.84 per share. At current value, the price-to-book value of the company is 2.61.
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