Navneet Publications has target of Rs 90: Dipen Sheth

Navneet Publications has one year target of Rs 80-90, says Dipen Sheth, Head-Institutional Research, HDFC Securities.

Sheth told CNBC-TV18, "Navneet Publications is a very good example of a company with an excellent franchise in the area it works in which is publishing, education, supplementary books primarily with a footprint in Maharashtra and Gujarat where it has an unbeatable position where close to about 60 percent or maybe two-thirds of the market is Navneet Publications and return ratios are very good, margins are very good, Rs 1,500 crore market cap slated to double profits in about three years to FY15, 25 percent return on equity (RoE), 25-26 percent EBITDA margins and this is available for about 10 times FY15 with a 3 percent dividend yield. It has got everything going for it, 62 percent promoter holding, you name it, they have it and I think this is a very decent valuation to buy into the stock."
He further added, "If you look at a P/E re-rating as a possibility, it has not happened in a while for Navneet because for the last two-three years, the stock went nowhere simply because there was no syllabus change playing out in Gujarat or Maharashtra and much of that is now going to happen as syllabi converge to the CBSE model across the country. So, there is going to be earnings growth and that will perhaps drive P/E re-rating. So, with the kind of return ratios and 10 times valuations right now, I would say an Rs 80-90 kind of price target in a year’s time cannot be ruled out."