MT Educare Ltd. share price target

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...

During the quarter, MT Educare has reported total income from operations at Rs.872 Mn, posting YoY growth of 5.1% when compared to Rs.829 Mn in Q2FY16. The company's EBITDA margins improved by 1463 bps to reach 28.5% due to lower direct expenses and other expenses during the quarter compared with 13.9% during Q1FY17. EBITDA registered 112.4% growth QoQ and improved from Rs.117 Mn during Q1FY17 to Rs.249 Mn during Q2FY17. The company managed to post 14.3% PAT margins during the quarter expanded by 618 bps from 8.1% during Q1FY17 and PAT has been increased from Rs.68 Mn during Q1FY17 to Rs.124 Mn during this quarter registering growth of 82.5% QoQ.

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

MT Educares results for 3QFY2016 came in-line with our estimates. The companys top-line growth was strong mainly due to firm growth in Robomate product sales as well as in the Government Projects segment. However, the core coaching business was subdued during the quarter. On the operating front, the company reported margin improvement which led to higher profitability. Strong growth in Robomate product sales and Government Projects segment boost overall consolidated top-line: For the quarter, MT Educare registered a doubledigit growth in its top-line, ie of ~25% yoy to ~Rs71cr, on back of strong growth in Robomate product sales as well as in the Government Projects segment. However, the core coaching business was subdued during the quarter. PAT grew ~34% yoy: MT Educare posted a net profit growth of ~34% yoy to ~Rs8cr, owing to strong revenue growth and higher other income. Outlook and valuation: We expect MT Educare to report a strong top-line and bottom-line growth in the coming financial years (FY2016E and FY2017E) on back of healthy growth in coaching business (school, science and commerce). This would be owing to its strong brand image and with it implementing innovative teaching technologies. Further, we expect additional revenue growth from execution...

For 2QFY2016, MT Educare reported results above our estimates. The companys top-line growth was strong mainly due to firm growth in Robomate product sales as well as Government Projects segment. However, the core coaching business was subdued during the quarter. On the operating front, the company saw pressure due to increase in other costs. However, higher other income and a lower tax expense boosted the companys overall profitability. Strong growth in Robomate product sales and Government Projects segment boost overall consolidated top-line: For the quarter, MT Educare registered a doubledigit growth in its top-line, ie of 26% yoy to ~Rs83cr, on back of strong growth in Robomate poduct sales (at Rs17.6cr) as well as in the Government Projects segment. However, the core coaching business was subdued during the quarter. PAT grew ~21% yoy: Despite of operating margin pressure, which was on account of higher other costs, MT Educare posted a net profit growth of ~21% yoy to ~Rs14cr, owing to strong revenue growth, higher other income and lower taxes. Outlook and valuation: We expect MT Educare to report a strong top-line and bottom-line growth in the coming financial years (FY2016E and FY2017E) on back of healthy growth in coaching business...

students from 9 grade to the 12 grade in science/commerce streams, for engineering, medical and MBA entrance exams, and for chartered accountancy exams. The company operates in 136 locations across 10 states in India (major presence in Mumbai), has 2,500+...

Potential growth in Science Segment: The science segment has shown consistent growth since FY10; revenue from the science segment was Rs.214mn during FY10, which increased to Rs.765mn in FY15. We expect the number of student signups to grow at 10% and the realization per student is likely to surge by 7 to 9% thus contributing an overall growth rate of 18% for the science segment and now company is set to expand its operationsin Pune, Kolhapur and Nashik. The Karnataka Pre-University (PU) College Tie-up Model is one of the most significant growth areas under the science vertical. MT Educare has 18 tie-ups to provide their services, which include 4 tie-ups undertaken in the FY15-16 and company is planning to expand its tie-ups to the total of 30 colleges by the end of FY17E-18E.