Buy Navneet Education; target of Rs 130: ICICI Direct

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ICICI Direct's research report on Navneet Education

Navneet reported healthy revenue growth of 18.7% YoY to Rs 795.0 crore (I-direct estimate: Rs 771.7 crore). On the segmental front, revenues from publishing segment grew 18.1% YoY to Rs 432.2 crore while revenue from the stationery segment increased 19.5% YoY to Rs 362.5 crore. Growth in the stationery segment was mainly driven by exports, which grew 27% YoY to Rs 253 crore. EBITDA margins remained flattish YoY at 29.1% (I-direct estimate: 30.0%) mainly on account of higher other expenses (up 23% YoY to Rs 107.6 crore). Other expenses includes Rs 13.2 crore incurred towards the dispute resolution of MVAT liability. Excluding the same, EBITDA margins were at 30.7%. Increase in finance cost (up 67% YoY to Rs 7.0 crore) and depreciation expense (up 40% YoY to 8.0 crore) impacted PAT growth to a certain extent. The resultant PAT grew 16.7% YoY to Rs 147.4 crore.

Outlook

The stock is available at reasonable valuations of 11.5x FY21/PE. We maintain our BUY rating on the stock with a target price of Rs 130, valuing at a multiple of 14.0x FY21E EPS.

For all recommendations report, click here

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