Navneet Education Ltd. share price target

EBITDA declined 23% YoY to INR157m (our Net sales grew 21% YoY to INR11,150m, EBITDA increased 23% YoY to INR2,594m and PAT grew 18% YoY to INR1,628m. We raise our FY20/21 PAT estimate by 13%/12% with the K-12 business (Orchids The International School) turning profitable it is expected to be PAT-accretive FY19 onward. We expect NELI to deliver sales/PAT CAGR of 14%/17% over FY19-21 and value the stock at 14x FY21E EPS with a target price at INR159. Maintain Navneet Education NELI has invested in a school management company, which manages 19 CBSE schools under the brand Orchids The International School. Orchids The International School is now an established player in the direct education business. Its occupancy is expected to inch up to 75-80% by Mar19, resulting in PAT accretion of ~INR100m for NELI (35% NELIs share). The company further plans to expand schools under its management.

Navneet reported a dismal set of Q3FY19 numbers wherein results were below our estimates across all parameters Revenue for the quarter grew moderately by 4.1% YoY to | 181.6 crore (I-direct estimate: | 200 crore). On the segmental front, revenues from publishing segment grew by 22% YoY to | 103.1...

Navneet Education Ltd. (NEL) delivered robust set of numbers in Q2FY19 which came in marginally ahead of our estimates. Its net sales grew by 44.5% yoy led by publication segment which grew by 52.1% yoy. Traditionally Q1 is a strong quarter for NELs publication segment, however delays on account of licensing led to spillover of revenues in Q2. Its stationery segment also registered a robust growth of 29.5% yoy in Q2FY19.

ICICI Securities Ltd | Retail Equity Research Navneet reported a healthy set of Q2FY19 numbers mainly driven by a robust performance in the publication segment Revenues grew 44.5% YoY to | 263.5 crore (I-direct estimate: | 231.1 crore). Publication segment grew 52.5% YoY to | 179.5 crore. Growth acceleration was mainly on account of a spillover of revenues in Q2FY19. Stationery segment also reported a strong topline growth of 31% YoY to | 83.6 crore...

9 August 2018 Standalone revenue grew 19% YoY to INR6,700m (est. of INR6,453m) in 1QFY19, primarily driven by 58% YoY growth in Stationery revenue. EBITDA rose 22% YoY to INR1,974m (est. of INR1,916m), with the margin expanding 75bp YoY to 29.5% (est. Adj. PAT grew 15% YoY to INR1,263m (est. PAT margin was flat YoY at 19% (in-line). declined 2% YoY, primarily on account of a delay in government textbook (Balbharti) release (based on which the supplementary material is created) for standards 1, 8 and 10, where syllabus was changed. The delay was due to the introduction of a new policy on licensee fee, which was announced only on 21 June 2018. Consequently, we expect a spillover of ~INR600-700m of revenue to 2QFY19. Moreover, Publishing business visibility has improved further for FY20 based on syllabus change in Gujarat. We expect Publishing business to grow by 12% in FY19 and 9% in FY20.

ICICI Securities Ltd | Retail Equity Research Navneet's revenues grew 19% YoY to | 670 crore (I-direct estimate: | 620.9 crore). Growth was mainly driven by the stationery segment, which grew 60% YoY to | 303.4 crore. In the seasonally strong quarter for the publication segment, revenues in the segment declined marginally by 1.5% YoY to | 366 crore EBITDA margins for the quarter improved 60 bps YoY to 29.5% (Idirect estimate: 28.1%) on account of a decline in employee & other expenses as a percentage of sales by 60 and 20 bps, respectively. On...

May 2018 Educations (NELI) revenue grew by a sluggish 1.3% YoY to INR2,126m in 4QFY18. Adj. PAT declined 10% YoY to INR151m. PAT margin contracted 92bp YoY to 7.1% in 4QFY18. For FY18, revenue grew 2% to INR12,040m, EBIDTA declined 21% to INR2,225m and EBIDTA margin contracted 533bp to 18.5%. These government orders are typically placed by the social welfare and tribal departments, among others, to provide support to underprivileged students. According to management, the focus of these departments has now shifted to infrastructure provision, and thus, it does not foresee any government orders from now. large stationary order worth INR350m (which was received in 4QFY18) was deferred to 1QFY19, resulting in sluggish growth (2%) in Stationary in 4Q, which is a seasonally strong quarter for the segment. Going forward, management expects high growth in the high-margin exports business, while the domestic business is expected to continue witnessing competitive pressures.

Navneet Education Ltd. (NEL) delivered subdued set of numbers for Q4FY18 in which Revenue grew by 3.5% yoy. The EBITDA de-grew by 18.1%, as EBITDA margin shrunk to 11.2% in Q4FY18. Net profit for the quarter de-grew by 10.7%.

ICICI Securities Ltd | Retail Equity Research In a seasonally weak quarter for Navneet, revenues were at | 212.6 crore (I-direct estimate: | 225.3 crore), up 4% YoY. On the segmental front, revenues from the publishing and stationery segment grew 2% and 4% YoY to | 54.3 crore and | 157.8 crore, respectively EBITDA margins for the quarter declined 308 bps YoY to 11.2% (Idirect estimate: 12.0%) on account of an increase in employee and other expenses by 23% and 11%, respectively. EBIT margins for the publication segment declined 953 bps YoY to 15.5% mainly on...

Navneet delivered decent set of numbers for Q3FY18 in which Revenue/EBITDA grew by 12.8%/7.1% yoy led by 48.7% growth in the stationery segment. However, net profit de-grew by 6.1% during the quarter mainly on account of lower other income and higher tax rate.