MOSL: NAVNEET EDUCATION (Buy)-Indiannica scale-up slower than expected-trim PAT est
Navneet Education: Indiannica scale-up slower than expected; trim PAT est.
(NELI IN, Mkt Cap USD0.4b, CMP INR108, TP INR135, 25% Upside, Buy)
- 4QFY19 revenues (standalone) of INR2,455m (our est. INR2,303m) grew 15.5% YoY, while EBITDA margins expanded 30bp YoY to 11.5% (our est. 13%). EBITDA grew 18% YoY to INR282m (our est. INR299m); PAT stood at INR147m (our est. INR185m), a YoY decline of 2.8%.
- Full-year performance (consol. basis): In FY19, revenues/EBITDA/PAT grew 20%/22%/20% to INR14.4b/ INR2.7b/INR1.5b. Overall, EBITDA margins expanded 20bp to 18.7%.
- Stationery business grew 16%, K-12 turns profitable: Stationery revenue grew 16% to INR1,829m, driven mainly by exports, which were up 27% YoY to INR1,130m. Domestic stationery business declined 1% to INR700m. 4QFY19 being a seasonally slow quarter for the Publishing business, revenue was up 14% YoY to INR622m. K-12, NELI's associate company, turned profitable in FY19, contributing INR56m (NELI's share - 35%) to earnings. In FY20, K-12 is expected to do significantly well on increased occupancy - we expect PAT at INR180m/INR250m in FY20/FY21.
Navneet Education Limited, formerly Navneet Publication (India) Limited, is engaged in the business of publication of education and non-education books, and manufacture of paper and non-paper stationery products. The Company's segments include Publication, Stationery and Others. Its geographical segments include North & Central America, Africa, Europe, Australia & Oceania, Rest of the World and India. It has published over 5,000 titles in English, Gujarati, Hindi, Marathi, Tamil, Urdu, and other Indian and Foreign Languages. The Company sells its products under various brands, including Navneet, Vikas, Gala, Grafalco, FfUuNn and Boss. 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 and hygiene, art and artist, cooking, mehendi and embroidery, among others. It has manufacturing facilities in Virar (near Mumbai), Guma, Dantali and Silvassa.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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