Buy Navneet; target of Rs 74: Networth Stock Broking

“ Navneet Publications  (NPL) has been the leader in the supplementary education book space. The Indian education system is examinationcentric and success is equated with high marks. In this backdrop, supplementary books, with examination-focused questions and answers, have gained high significance. NPL primarily has dominant presence in Gujarat and Maharashtra wherein It enjoys a market share of 60-65% in the supplementary education books segment. Company is also foraying now into Andhra Pradesh and Karnataka.”

“NPL has forayed into high margin E-learning business wherein it has digitalized full curriculum content of primary and higher secondary school. This would enable NPL to clock 40% margin. As the average instructional days in schools across India are just 206 in a year, student-teacher ratio is skewed, school infrastructure is below standards, and this tool can be an aid to the teachers as well as students and lead to holistic view on learning. NPL is expected to cater to ~500 schools for FY11 & 1000 schools by FY12 and aspires to reach 5000 schools by FY15.”

“NPL reported excellent Q3FY11 results wherein PAT grew by 29% YoY to Rs 6.15 crore and revenue grew by 10% YoY. Taking into consideration its strong brand image, foray into E-learning and Stationery Segment Restructuring NPL appears to be a promising player going forward. Currently stock is trading at P/Ex of 12.8 its FY 2012E EPS of Rs 4.6 we recommend BUY with a price target of Rs 74 in a period of next 12 months,” says Networth Stock Broking research report.

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