Navneet Education Ltd.

Transcription

1 Navneet Education Ltd. INDUSTRY Printing and Publishing No. of Shares (Crore) Face value (Rs) 2 Mkt. Cap (Rs. Crore) Price (22/09/2017) Book Value (Rs) P/BV 5.67 BSE Code NSE Code NAVNETEDUL Bloomberg NELI IN Reuters NAVN.BO Avg. Monthly Volume W H/L (Rs) /93 Shareholding Pattern % Indian Promoters Foreign Promoters 0.00 DIIs FPIs 5.72 Body Corporate 2.13 Non-Institutions Total 100 (As on June 30, 2017) Recommendation BUY Company Background Navneet Education Limited (NEL) is one of the largest paper stationery brands in India founded by the Gala Family. It is in the business of Educational, Children and General books Publication, Scholastic Paper and Non-Paper Stationery products. Navneet Education derives 54% of its revenue from publishing and 44% from stationery. Navneet holds around 65% market share in Maharashtra and Gujarat. Presently it holds more than 500 Stock Keeping Units with premier stationary market in USA, Africa, Europe and Middle East. Its stationary manufacturing plant is located at Vasai, Silvassa and Daman and publishing plant is located at Dantali and Santej. Investment Rationale Navneet recently acquired Encyclopaedia Britannica (India) Pvt. Ltd. now renamed into Indiannica Learning Pvt. Ltd., enables it to diversify its geographical reach and make it a pan- India player. The company will market Britannica s existing India specific curriculum titles such as Know for Sure and The English Channel and also publish text books for the CBSE board which will help in expanding Navneet s curriculum. Indiannica plans to add 3 new series of 24 titles, which will boost the current library and help the company to venture into newer geographies. National Council of Educational Research and Training (NCERT) have updated its syllabus and even recent change in the state board syllabus in Gujarat and Maharashtra for major classes will have significant growth opportunity. NEL is also well placed to capture growth triggers like common curriculum across India, and conversion of SEB schools to CBSE. NEL through its digital subsidiary esense provides elearning solutions to schools and students in India and thus integrates technology with learning. Its digital segment through its classroom teaching tool models and management focus on B2B model is likely to provide sustainable growth. Government initiatives and increase in spending towards education will result in increased business opportunity for the company. Export sales in stationary segment is expected to grow which will help to have more predictability of business. Company s standalone revenue for the quarter remained constant at Rs. 565 crore as against Rs. 560 crore in corresponding quarter of last year and PAT for the quarter came in at Rs. 110 crore, YOY decline of 3.4%. Its consolidated topline and bottomline grew at a CAGR of ~9.85 % and ~12.45 % respectively. In FY17, its EBIDT and Net Profit margin improved to 23% and 14 % respectively. The company is on the right track to reap the benefits of changing syllabus, common curriculum across India, and conversion of SEB schools to CBSE. Moreover growth opportunities in exports and the elearning platform are additional triggers. The current valuation of 15 times FY19 earnings looks attractive. We recommend a BUY on the stock with a Price Target of Rs. 213 (19 x FY19 EPS) with an upside potential of ~27% from the current level with an investment horizon of 12 months. Particulars (Rs. Crs) Q1FY18 Q1FY17 Var % FY13 FY14 FY15 FY16 FY17 Net Sales , PBIDT (Excl OI) Profit After Tax PBIDTM (Excl OI) 28.73% 31.22% % 23.40% 24.00% 21.08% 23.06% PATM 19.40% 20.27% % 12.85% 13.11% 11.17% 14.32% EPS (Rs.) ^Q1 numbers are standalone and annual numbers are consolidated 1

2 Company Profile Since 1959, Navneet has been a major force in the dissemination of knowledge and in the field of publishing with more than 5,000 titles in English, Gujarati, Hindi, Marathi, Tamil, Urdu and other Indian and Foreign Languages. The company markets its products under the brands namely Navneet, Vikas, Gala, Grafalco, Boss, YOUVA, TOP Class & TOP Scorer. Navneet s educational syllabus based supplementary books are Digests (Guide), Workbooks, and 21 Most Likely Question Sets. It also publishes various titles in the Children and General books category, which are not based on syllabus, such as coloring and activity books, board books, story books and books on health & hygiene, art & artist, cooking, mehendi, embroidery etc. Under the brand of YOUVA, Navneet provides with extensive range of note-books, drawing books, pencils, colour pencils, wax crayons, sharpeners, erasers, geometry boxes, glue and clay. Navneet Business Snapshot Financials 2

3 Standalone(Value in Rs. Crs) Q1FY18 Q1FY17 Var % FY17 FY16 Var % Net Sales , Total Expenditure PBIDT (Excl OI) Other Income Operating Profit Interest PBDT Depreciation Tax Profit After Tax EPS (Rs.) Consolidated Income Statement (Value in Rs. Crs) FY13 FY14 FY15 FY16 FY17 Net Sales Total Expenditure PBIDT (Excl OI) Other Income Operating Profit Interest PBDT Depreciation Tax Profit After Tax Minority Interest Share of Associate Other Consolidated Items Consolidated Net Profit EPS (Rs.)

4 Consolidated Balance Sheet (Value in Rs. Crs) Description FY13 FY14 FY15 FY16 FY17 EQUITY AND LIABILITIES Share Capital Total Reserves Shareholder's Funds Minority Interest Long-Term Borrowings Secured Loans Unsecured Loans Deferred Tax Assets / Liabilities Long Term Provisions Total Non-Current Liabilities Current Liabilities Trade Payables Other Current Liabilities Short Term Borrowings Short Term Provisions Total Current Liabilities Total Liabilities ASSETS Non-Current Assets Gross Block Less: Accumulated Depreciation Net Block Capital Work in Progress Intangible assets under development Non Current Investments Long Term Loans & Advances Other Non Current Assets Total Non-Current Assets Current Assets Loans & Advances Inventories Sundry Debtors Cash and Bank Other Current Assets Short Term Loans and Advances Total Current Assets Net Current Assets (Including Current Investments) Total Current Assets Excluding Current Investments Total Assets

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