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India Equity Research Reports, IPO and Stock News
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S t a t i o n e r y s e g m e n t a ff e c t e d b y r u p e e …
Navneet Publications’ (Navneet) Q3FY12 results were marginally lower
than our estimates on the topline front. However, the EBITDA and PAT
were considerably lower than our estimates. The company reported a
topline of | 84.1 crore (up 12.8% YoY) against our estimate of | 90.5
crore, led by 13.6% and 10.9% YoY growth in the publication and
stationery segment, respectively. The operating margin came in lower
than our expectation of 14.8% due to increased raw material cost and
higher other expenses. The company reported an EBITDA margin of
11.9%, down 156 bps YoY. A weak operating performance and a
depreciating rupee led to a PAT de-growth of 34.8% YoY to | 4.0 crore (Idirect estimate: | 7.4 crore). While the publication segment is expected to
continue its strong performance on the back of the lined up syllabus
changes, the stationery segment is likely to face short-term problems. We
have revised our FY12E estimates to factor in the same.
ƒ Segmental highlights
Publication: The publication segment reported a topline growth of
13.6% and 18.5% to | 48.1 crore and | 319.9 crore in Q3FY12 and
9MFY12, respectively. The segmental EBIT margin stood at 21.5%
and 34.2% in Q3FY12 and 9MFY12, respectively (22.2% and 33.6%
in Q3FY11 and 9MFY11).
Stationery: The stationery segment’s revenues increased by 10.9%
to | 34.7 crore in Q3FY12. However, for 9MFY12, the segment
revenues de-grew 3.3% to | 173.6 crore. The segmental EBIT
margin stood at -8.9% and 8.4% in Q3FY12 and 9MFY12,
respectively (4.0% and 13.6% in Q3FY11 and 9MFY11).
V a l u a t i o n
Considering the virtually debt-free status, healthy return ratios (RoE of
greater than 20%), strong free cash flow generation and the potential to
boost the earnings through inorganic growth, we believe Navneet
Publications is a good play on the Indian education sector. At the CMP of
| 57, the stock is trading at 16.6x and 13.2x its FY12E and FY13E EPS of
| 3.4 and | 4.3, respectively. We have a BUY rating on the stock with a
target price of | 65 (based on 15.0x FY13E EPS).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
PDF LINK for report- click HERE
S t a t i o n e r y s e g m e n t a ff e c t e d b y r u p e e …
Navneet Publications’ (Navneet) Q3FY12 results were marginally lower
than our estimates on the topline front. However, the EBITDA and PAT
were considerably lower than our estimates. The company reported a
topline of | 84.1 crore (up 12.8% YoY) against our estimate of | 90.5
crore, led by 13.6% and 10.9% YoY growth in the publication and
stationery segment, respectively. The operating margin came in lower
than our expectation of 14.8% due to increased raw material cost and
higher other expenses. The company reported an EBITDA margin of
11.9%, down 156 bps YoY. A weak operating performance and a
depreciating rupee led to a PAT de-growth of 34.8% YoY to | 4.0 crore (Idirect estimate: | 7.4 crore). While the publication segment is expected to
continue its strong performance on the back of the lined up syllabus
changes, the stationery segment is likely to face short-term problems. We
have revised our FY12E estimates to factor in the same.
ƒ Segmental highlights
Publication: The publication segment reported a topline growth of
13.6% and 18.5% to | 48.1 crore and | 319.9 crore in Q3FY12 and
9MFY12, respectively. The segmental EBIT margin stood at 21.5%
and 34.2% in Q3FY12 and 9MFY12, respectively (22.2% and 33.6%
in Q3FY11 and 9MFY11).
Stationery: The stationery segment’s revenues increased by 10.9%
to | 34.7 crore in Q3FY12. However, for 9MFY12, the segment
revenues de-grew 3.3% to | 173.6 crore. The segmental EBIT
margin stood at -8.9% and 8.4% in Q3FY12 and 9MFY12,
respectively (4.0% and 13.6% in Q3FY11 and 9MFY11).
V a l u a t i o n
Considering the virtually debt-free status, healthy return ratios (RoE of
greater than 20%), strong free cash flow generation and the potential to
boost the earnings through inorganic growth, we believe Navneet
Publications is a good play on the Indian education sector. At the CMP of
| 57, the stock is trading at 16.6x and 13.2x its FY12E and FY13E EPS of
| 3.4 and | 4.3, respectively. We have a BUY rating on the stock with a
target price of | 65 (based on 15.0x FY13E EPS).
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