SKP Securities assigns target of Rs 77 to Navneet

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SKP Securities assigns target of Rs 77 to Navneet

SKP Securities is bullish on Navneet Publication (NPL) and has assigned target price of Rs 77 to the stock, in its June 16, 2011 research report.

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SKP Securities is bullish on Navneet Publication (NPL) and has assigned target price of Rs 77 to the stock, in its June 16, 2011 research report.

"Navneet Publication Ltd (NPL), the flagship company of Gala family, publishes educational and children books and produces scholastic paper stationery and nonpaper stationery products. NPL is a dominant player in the field of publishing, with more than 5000 titles in English, Hindi, Marathi, Gujarati and foreign languages. NPL has ventured into e-learning, which is still at a nascent stage with about 487 schools tie ups. Total revenue for Q4FY11 stood at Rs. 95.43 crores, degrew by 5.3% Yo- Y basis. Revenue from Publication segment stood at Rs. 29.40 crore, registered a growth of 8.6% and revenue from stationery segment degrew by 10.7% on account of hit in export sales. EBITDA margin improved by 86 basis points to 15.22% as compared to 14.3% in same period last year, mainly due to cost efficiency."

"NPL has taken few initiatives to restructure its stationery segment by adding new products in its portfolio and focusing towards high yielding segments. We expect NPL stationery segment to register 15-16% CAGR growth for next 2 years. NPL entered into the E-learning segment couple of years back and at present has tie ups with 487 schools. Having a strong presence in Gujarat and Maharashtra, NPL is expected to expand its reach to over 1200 schools by FY12 with its strong distributor network. Due to technological advancements the concept of E-learning is getting higher acceptance by parents. We believe, this segment will add significant contribution to NPL's top line in near future. During FY12 Maharashtra board has proposed to change the syllabus for 1st and 2nd standard, few subjects of 4th, 8th, 10th and 11th standard. Gujarat board has also approved to change the syllabus of few of its standard. Since NPL is a dominant player is these two states, aforesaid move will benefit NPL by showing double digit growth in its publications segment. During the syllabus revision period the second hand book market become irrelevant. We expect NPL's publication segment is expected to grow by 13-14% for next two years."

"At current market price of Rs. 65/-, NPL is trading at P/E of 16.7x and 14.4x for FY12E and FY13E respectively. We have revised our FY12E and FY13E EPS to Rs. 3.90 and Rs. 4.51 respectively and arrived at a target price of Rs. 77 /- (17% upside) in 12 months, implying a PE of 17x to EPS of FY13E," says SKP Securities research report.

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To read the full report click on the attachment