India Ratings & Research (Ind-Ra) has affirmed NIIT long-term issuer rating at 'AA-'. The outlook is stable. The affirmation reflects NIIT's strong balance sheet, positive cash flow and stable credit profile in FY14 (year end March), despite the continued weakening of its business risk profile and stress on revenue and earnings.  Ind-Ra has taken a consolidated view of NIIT's business and financials for the rating purpose.

The rate of decline in revenue in the company's ILS business improved to negative 13.6% yoy in FY14 from negative 21% yoy in FY13. The segment revenue fell due to low IT enrolments. The maturity of the existing information and communication technology (ICT) contracts, the company's policy of no further bidding in new ICT contracts and planned exit from capex driven products in private schools business (only services contracts) are translating into softer revenue in the school learning solutions (SLS) business. The ILS business contributed 41.6% to NIIT's consolidated revenue in FY14 and SLS contributed 16.3%. Consequently, NIIT's consolidated revenue decreased slightly to Rs 9,510 million in FY14.

Ind-Ra expects NIIT's credit profile to remain stable over the medium term, given low capex and cautious management of working capital cycle and completion of initial expenses on the cloud model.  Working capital cycle improvement was led by the company’s emphasis on reduction of cash cycle, led by strict control of debtors and reduction in businesses involving a high debtor's cycle.

Shares of the company gained Rs 1.65, or 3.16%, to settle at Rs 53.80. The total volume of shares traded was 600,953 at the BSE (Wednesday).