Prabhudas Lilladher recommended accumulate rating on Navneet Education with a target price of Rs 161 in its research report dated May 14, 2018.
Prabhudas Lilladher's research report on Navneet Education
Navneet's (NELI) Q4FY18 standalone results were marginally below expectations with 1.8% YoY revenue growth and 10.6% YoY earnings contraction in a seasonally lean quarter. However, disappointment came from Indiannica Learning Ltd (ILL) which reported loss of Rs193.9m for FY18 impacted by operating deleverage, higher employee cost and lower revenue recognition due to change in accounting policy for sales return to the tune of ~Rs170m. Management is confident of (i) steady double digit growth in publishing aided by syllabus change in key states (ii) better stationery export visibility for FY19 and (iii) double digit growth coupled with improved margins with large expansion in titles in ILL.
Outlook
While we continue to remain optimistic on long term growth prospects of the company, near term outperformance may be lower with synergy with ILL being a key factor to watch-out for. Downgrade to Accumulate with TP of Rs161 (from Rs198 earlier) valuing at 20x FY20E.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.