Buy

Reported revenue stood at Rs. 419 crores, up 5% q-o-q/ 7% y-o-y, beating our estimates of Rs.410 crores. Revenue growth in CC terms rose 5%q-o-q / 7% y-o-y, respectively. EBITDA margin fell 15 bps q-o-q/115 bps y-o-y to 21.9% and was below our estimates of 22.9%.

For Q2FY2025, NLSL revenue stood at Rs. 397 crore, down 2% q-o-q/up 4% y-o-y in CC, missing our estimate of Rs. 417 crore.

We estimate a 31.72% CAGR in revenues based on return of classroom teaching, increase in the number of centers, added TAM from the CUET Exam and growth in MarTech business till FY24. We expect PAT margins for FY24 to be in the range of 6.5%.

MT Educare's (MT's) FY19 core operating results are line with our estimates. The company reported a profit at the operating and net levels after registering losses in FY18 on account of one-time expected credit loss (ECL) provisions relating to Aryan Foundation, Sri Gayatri Educational Trust, certain government projects, and other debtors. While operating revenue came in marginally lower than our expectation, EBITDA was in line, leading to 50 bps higher EBITDA margin (12.5%). PAT was higher than our estimate due to higher-than-expected other income....

MT is a strong player in school and higher secondary science coaching in Maharashtra. It also has a good presence in Karnataka where it manages pre-university colleges in partnership with Aryan Foundation. MT's key strengths include 3 decades' experience, top-ranking students, and strong brands. The company's strategy to collaborate with local partners in new markets and exploring different models to expand should enable it to accelerate growth going forward. The company's government projects vertical is expected to contribute...

Zee Learn (ZLL) in 3QFY18 posted revenues of Rs. 52 Cr (up 72% Y-o-Y) on a consolidated basis due to robust 20% growth in preschool and K-12 segment, 57% growth y-o-y in income from lease rentals and an additional revenue stream from manpower recruitment and training

Investment Rationale

PAN India presence with aggressive expansion in footprint, enrolment growth in its institutes, asset light business model, increasing capacity utilization and increase share of wallet makes ZLL a perfect play to participate in the growing opportunities of Indian education industry.

Company has entered into a new strategic line of manpower recruitment and training business through the newly incorporated subsidiary Liberium Global. This segment generated ` 14.33 Crore revenues in Q3 FY18 . The margins for manpower verticals are on the lower side. However, company see tremendous opportunities for growth. The business being a high ROI and low margin one, company looks to differentiate its offering through value added services and the management is confident that this business will provide robust growth in the future.

Zee Learn Ltd. (ZLL) reported Q3FY18 standalone revenues at INR 30.5cr (up ~20% YoY), inline with our estimate, healthy performance dispite seasoanlly weakest quarter. Gross margin were...

Zee Learn (ZLL) in 2QFY18 posted revenues of Rs. 60 Cr (up 59% Y-o-Y) on a consolidated basis due to consistent growth in preschool and K-12 segment,63% growth y-o-y in income from lease rentals and an additional revenue stream from manpower recruitment

Zee Learn Ltd. (ZLL) reported Q2FY18 standalone revenues at INR 37cr (up ~11% YoY), 6% below our estimate. Gross margin were reported at 88% above our estimates.

Zee Learn (ZLL) in 1QFY18 posted revenues of Rs. 67 Cr (up 44% Y-o-Y) on a consolidated basis due to consistent growth in both Kidzee (pre-school) & MLZS (K-12) segments, and an additional revenue stream from manpower recruitment and training from the newly incorporated subsidiary. ZLL posted PAT of..

Zee Learn Ltd. (ZLL) reported Q1FY18 standalone revenues at INR 52cr (up ~23% YoY) in-line with our estimate. The sales growth was led by healthy growth in student enrollment in Mount Litera...

Zee Learn (ZLL) in 4QFY17 posted revenues of Rs. 60.1 Cr. (up 20% Y-o-Y, up 136% Q-o-Q) due to consistent growth in both Kidzee (pre-school) and MLZS (K-12) segments. It posted PAT of Rs 14.7 Cr (up 89% Y-o-Y, up 141% Q-o-Q) due to operational leverage coming into play bringing about economies

Zee Learn Ltd. (ZLL) Q4FY17 reported revenues at INR 60cr (up ~20% YoY) in line with our estimate. The sales growth was led by healthy growth in student enrollment in Mount Litera (K-12) Schools

Zee Learn, engaged in educational services in India, owns the largest and fastest growing chain of pre-schools and K-12 schools respectively. Under the pre-school segment, the company operates its flagship brand KIDZEE' with over 1,550 centres in the country.

The company has diversified its operations across various business segments spanning the education value chain. Test prep offers preparation courses for MBA, banking & SSC, law as well as engineering, medical, civil services and others under well-recognised brand Career Launcher. Publishing and content development provides test prep titles for professionals and entrance examinations under brand GK...

Buy MT Educare Ltd. between Rs. 130 - 113 Sequential Targets Rs. 149 - 177

Background: Tree House Education & Accessories Ltd (THEAL) is India's largest branded self-operated pre-school provider and the only listed self operated pre-school operator in India. It currently operates 720 pre-schools (611 are self operated) in 103 cities. In 2009, THEAL has done a forward integration to provide management services to K-12 schools. THEAL currently provides management services to 24 K-12 schools in 3 states. Geographically, THEAL's pre-schools are skewed towards Western India wherein it operates 56% of its pre-schools. The Pre-schools in other regions are as follows, North (16.5%), South (12.3%) and East (15.1%). THEAL's K-12...

Tree House Education & Accessories (THEAL) 2QFY2016 results underperformed our estimates on all parameters. The top-line growth was decent mainly due to strong addition of 73 new pre-schools. On the operating profit front, the company reported flattish growth yoy which resulted into lower growth in profitability. Top-line grew ~15% yoy: The companys top-line grew ~15% yoy to ~Rs57cr, mainly due to growth in existing pre-schools and addition of new pre-schools. The company added 73 pre-schools in various cities like Ahmednagar, Goa, Gurgaon, Jalgaon, Noida, and Ratnagiri, during the quarter. Poor operating performance drags down Net profit growth: The operating profit came in at ~Rs30cr, up ~2% yoy. However, operating margins contracted by 700bp yoy to 52.7%, as the company opened 73 new centres during the quarter, which is the highest ever in the history of the company in a single quarter. The reported net profit grew by only ~1% yoy to ~Rs13cr, due to the poor operating performance. Outlook and Valuation: We continue to remain positive on the stock, as we believe THEAL will continue to register robust growth going ahead. The growth would come on the back of consistent expansion of pre-schools and repayment of debt which would boost...