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Prabhudas Lilladher
S Chand & Co (Buy)
CMP: ₹469.05
Target: ₹679
S Chand & Company is a CBSE/ICSE focussed company deriving more than 80 per cent of business in Q4. The first nine months of financial year is a period of business planning, sampling, marketing, content revision, inventory build-up, etc for next academic year. Normally first nine months remains negative with apportionment of cost across quarters hence these results do not extrapolate to annual performance. Management has reiterated its 15 per cent plus revenue growth guidance led by K-12 segment with steady margins & reduction in working capital by 15-20 days (from ~253 days in FY17).
While S Chand has grown its revenue/PAT @32 per cent CAGR each over FY12-FY17 aided by timely tactical acquisitions, it is estimated to grow revenue/PAT at 16 per cent/42 per cent CAGR over FY17-FY19E
Reducing debt profile post IPO, strong growth visibility and the only pure play on K-12 publishing make SCHAND uniquely placed in education space.
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