Advent of Generative Artificial Intelligence (AI) and Data Science is being considered by some experts to be as world changing as the transition from horses to cars. Time will tell whether human life changes as fundamentally but the scale of disruption this will cause in the business world will be huge. Some businesses will lose, some will gain, and a few will boom.
One business that stands to gain massively from this development is Learning and Development. There will be huge reskilling demand from new and existing workers. A recent report pegs 57% CAGR growth in data science education in India between 2023 to 2028 (click here).
Education companies in India are understandably excited about this opportunity. And one amongst them is NIIT Ltd which has been a past pioneer in technology training. However, it has been going through a downward phase for many years as there were no big changes in technology and formal education imparted students the requisite job skills.
But now NIIT is looking to the upcoming years with confidence. In fact, the management is aspiring to increase revenues from 341 Crore in FY23 to 1200 Crore by FY 2027 with margins improving from negative territory at present to 15-20% during this period.
NIIT is heavily dependent on tech hiring (75% topline contribution) and balance 25% from BFSI etc. With exceptionally slow hiring by tech companies, short term prospects are weak and for FY24 the company is guiding single digit topline growth with break-even margins.
At a price of Rs 110, NIIT is trading at a market cap of around 1500 Cr despite having cash in hand of 700 Cr. If it is able to capture a decent share of AI & Data Science market, there could be strong uptick in its business. However, this right to win will come only to companies who first educate themselves to use ‘AI in Training’ and create curriculum/faculty to impart ‘Training in AI’.