NIIT is likely to stage a further recovery next week following the company's strong results for the second quarter ended March 31, 2003.

The scrip of the New Delhi-based software education major ended off its low at Rs 94.40 (from its 52-week low of Rs 93.10) on Thursday ahead of the announcement of its Q2 results. On Friday, the market was closed on account of a holiday for 'Good Friday'.

From a recent high of Rs 117.40 touched on April 7, 2003, the NIIT stock has shed 19.59 per cent to Rs 94.40. Earlier, it had risen by 24.29 per cent to Rs 117.40 on April 7 from a low of Rs 94.40 touched on April 1, 2003.

On Thursday, after market hours, for the quarter ended March 31, 2003, the software education major posted a net profit of Rs 6.36 crore (Rs 2.01 crore) on total income of Rs 96.54 crore (Rs 94.17 crore).

On a consolidated basis, for the quarter ended March 31, 2003, NIIT posted a net profit of Rs 5.40 crore (loss Rs 2.60 crore) on total income of Rs 182.10 crore (Rs 158.80 crore).

This performance at the net level was much better than the market expectations of around Rs 2.2 crore of profit after tax for Q2. Notably, both the software as well as learning solutions businesses recorded growth during the said quarter.

Commenting on NIIT's performance in the second quarter, chairman Rajendra S Pawar said, "We achieved steady growth in line with our projections, as a consequence of strategies implemented by us last year."

Talking about the company's future, Rajendran, chief operating officer, said, "We expect to enhance our customer loyalty through the unique B Sc (IT) and M Sc (IT) programme. The company also expects to address an entirely new market by offering the Planetworkz courses through 150 education centres next quarter. Q3 will see the launch of eGurucool products from NIIT centres."

NIIT has three segments namely- learning solutions, software services and systems integration (SI) and product distribution (PD).

For the second quarter ended March 2003, the learning solutions segment posted a 10 per cent year-on-year rise in sales at Rs 55.9 crore. Further, control on costs helped this segment to post a 23 per cent increase in operating profit at Rs 7.6 crore. On the other hand, the software services business recorded 24 per cent y-o-y rise in revenues at Rs 119.8 crore.

NIIT had earlier reduced its focus on the SI & PD business and as a result, this segment posted 44 per cent fall in revenues at Rs 6.4 crore. However, the improved cost structure of this segment led to a 180 per cent rise in OP at Rs 2.8 crore. Notably, this segment had recorded a loss of Rs 2.9 crore in the quarter ended December 2002.

NIIT continued to pursue its strategy of acquisitions to strengthen its capabilities and provide customers with better, faster and more competitive solutions. The most recent of these was the acquisition of US-based CognitiveArts, that signifies NIIT's focus on bridging the key technology gaps in the knowledge solutions practice.

This acquisition enables NIIT to leverage the strong brand presence of CognitiveArts in the US and access its Fortune 500 customers. Its strengths in the retail & financial services verticals are well aligned to the vertical focus of NIIT Technologies.

Fresh order intake of NIIT Technologies, the software division of NIIT, was at $40 million, a growth of 6.7 per cent sequentially. This is the seventh consecutive quarter when the order intake has witnessed a sequential growth. Fresh order intake comprised $30.5 million ($14.2 million) from USA, $6.4 million ($17.6 million) from Europe, $1.7 million ($5 million) from APAC and the balance $1.4 million ($0.7 million) from India.

Pending orders as on 31 March 2003 were at $108 million ($95.2 million as on 31 December 2002). Out of this, $62.1 million ($45.9 million) was from USA, $27.5 million ($28 million) from Europe, $12.3 million ($14.3 million) from APAC and the balance $6 million ($7 million) was from India.

During the quarter ended June 2002, NIIT had announced investment in NIIT SmartServe, its 100 per cent IT subsidiary focussed on IT-enabled services. It secured its first major order - a $10 million order from Misys Independent Financial Advisory Services plc in UK- in November 2002.

During the first quarter, NIIT SmartServe started executing its first major multi-million dollar business process outsourcing services order in the insurance vertical. During the second quarter, the subsidiary ramped up its operations further.