This profitable Edtech stock skyrocketed 5.26x in the last two years

NIIT Ltd is involved in the business of providing outsourced corporate learning and development services.

NIIT Ltd, an S&P BSE small cap company has given its shareholders multibagger returns in the last two years. Shares of NIIT Ltd were trading at Rs 90.65 on 3rd June 2020. Two years later, on 3rd June 2022, the stock has appreciated to Rs 477.

NIIT Ltd is involved in the business of providing outsourced corporate learning and development services. NIIT is the world’s largest standalone training provider in terms of both EBITDA margin and EBITDA numbers. NITT Ltd operates in two segments- corporate learning and skills & career. The company also had a school business, which they shut down in FY 2019-20 due to lack of profitability.

Since then, the financials of the company have shown impressive growth. In last three years, a compounded revenue growth of 17%, an increase from Rs 865 crore to Rs 1377 crore was recorded by the company. In the same period, net profit grew from Rs 86 crore to Rs 226 crore.

The company’s client base increased from 8 clients in 2011 to 58 clients in 2022. Some of the company’s clients include Shell, SAP, DELL, Bank of America, and Unilever.

Talking about the industry, the global spending on corporate training is estimated to be 370 billion USD. Less than 250 out of Fortune 1000 companies outsource their training. So, there is a huge potential for the corporate training outsourcing industry to grow. Outsourcing corporate training helps companies to convert fixed cost payroll of a large army of in-house trainers into variable expenses for the company. This enables companies to maintain flexibility in terms of number of in-house trainers in both expansionary and contractionary phases of the business.

The company is expected to continue rapid growth in the future. However, in short term, one should look out for caution regarding the potential slowdown in eurozone, as majority of the NIIT Ltd.’s revenue comes from Europe.