MOSL: NAVNEET EDUCATION (Buy)-K-12 turns profitable-Stationary disappoints
Navneet Education: K-12 turns profitable; Stationary disappoints
(NELI IN, Mkt Cap USD0.3b, CMP INR105, TP INR159, 51% Upside, Buy)
- Revenue up 4% YoY; higher other expenses hurt EBITDA: Revenue increased ~4% YoY to INR1,816m (our estimate: INR1,898m), driven by 22% growth in Publication segment. EBITDA declined 23% YoY to INR157m (our estimate: INR218m), with the margin contracting ~310bp YoY to 8.6% (our estimate: 11.5%) on account of higher other expenses. Adj. PAT declined 37% YoY to INR75m (our estimate: INR138m). PAT margin shrank 260bp YoY to 4.2% (our estimate: 7.3%).
- 9MFY19 performance: Net sales grew 21% YoY to INR11,150m, EBITDA increased 23% YoY to INR2,594m and PAT grew 18% YoY to INR1,628m. EBITDA margin of 23% and PAT margin of 15% were stable versus the year-ago period.
- Publishing up 22% YoY; de-growth in Stationery: Publishing revenue grew 22% YoY, driven by supplementary books such as '21 sets', which are in high demand prior to the board exams and particularly as standard X syllabus changed in FY19. Publishing margin expanded 270bp YoY to 23%. Stationery revenue declined 12% to INR783m; paper price increase partly impacted the offtake.
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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