NIIT stuns as Q3 net dives 93%

NEW DELHI, India -- India's largest software education firm NIIT has stunned the market with a worse-than-expected 93.2 percent fall in third quarter net profit.

On the Bombay index, NIIT fell 16 percent to a four-year low of 252.25 rupees after posting its results for the April-June period on Thursday.

Analysts said poor performance in the IT education business, the main contributor to NIIT's sales, was the main culprit behind the dramatic dive.

"People are no longer investing in high value IT education, and that was driving the growth of the computer education sector," Ravindra Data, Gartner Group senior software analyst, told CNN.

The New Delhi-based education software house said its third quarter net profit fell to $1.12 million, or 1.37 rupees per share, from $16.5 million or 20.19 rupees a share in the corresponding period last year.

Net sales fell 25.2 percent, to $32 million from $42.8 million.

The operating profit margins of the software house fell to six percent for the quarter.

'Larger than normal impact'

"The global economic slowdown has had an early and larger than normal impact on NIIT," CEO Vijay Thadani told India's Economic Times.

"Though our software business has seen a slowdown, it is in line with the revised estimates made in March this year. What we did not anticipate was the impact the slowdown has had on our education business,"

In March, NIIT became the first big Internet software company to admit it would be hit by the slowdown in the U.S. economy.

It had warned investors that its U.S. software revenues for the second quarter would be below expectations.

But NIIT told reporters its dependence on the U.S. market had decreased, constituting one-fifth of total revenues after the third quarter.

The U.S. accounts for 60 percent of India's software exports, which are expected to top $6.2 billion during the year to March, up more than 50 percent from last year.

Reuters contributed to this report.