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Motilal Oswal
Navneet
Education (Buy)
CMP: ₹168.20
Target: ₹205
Navneet Education Ltd, founded by the Gala family, is in the business of a) publishing — educational, supplementary, children’s and general books; b) stationery products; and c) digital education. It derives 54 per cent of its revenue from publishing and 43 per cent from stationery. NELI’s products are sold under the brand names Navneet, Vikas, Gala, Grafalco, Boss, Youva and eSense. It recently acquired Britannica India’s curriculum business for ₹88 crore; this would be synergic to its CBSE curriculum business and did buyback of shares to tune of ₹58 crore.
Key takeaways: a) NEL dominates the market for supplementary educational material for the Maharashtra and Gujarat State Education Boards. Its domineering position makes it a key beneficiary of the sustained demand for new supplementary material and workbooks, driven by periodical syllabus overhaul by the State Boards.
b) Change of Syllabus in X and XII in Gujarat in FY18 and X and VII in Maharashtra in FY19 provides strong triggers for growth in next two years.
c) NEL also has various digital content offerings through its subsidiary, eSense. Though this segment hasn’t seen rapid growth since its launch in FY09, we believe this will change with increasing thrust on digitisation and growing penetration.
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