Buy Navneet, Astral Poly: Hold NMDC: Ventura

Ventura research's quarterly results updates on NMDC, Navneet Publications and Astral Poly Technik:

Buy Navneet Publications

The growth of publication business revenues of Navneet Publications (India) Ltd (NPIL) is expected to continue for the next couple of years on the back of the syllabus change process, which started in FY12 in Maharashtra and Gujarat. Also, common curriculum has started being implemented in selected states which will enable publication business to cater to the new markets. After doubling the revenues of its stationery business (exports), the company expects to witness a double digit growth for the coming years. Moreover, after attaining breakeven in its e-business, the incremental revenues are likely to contribute to the company’s EBITDA.

Consequently, on the back of multiple growth drivers viz. proposed common curriculum, geographic expansion and improved visibility in e-business and stationery business (exports), we expect revenues to grow at a CAGR of 16.9% to Rs 1101.6 crore by FY15E from Rs 805.7 crore in FY13. We expect PAT to grow at a CAGR of 19.8% to Rs 153 crore from Rs 106.6 crore in FY13. Further, we have cautiously not factored Rs 750 crore digital learning order received by NPIL from Directorate of Primary Education, Maharashtra which remains a substantial upside risk to our estimates. At the CMP of Rs 62, NPIL is trading at 11.8x and 9.5x its estimated earnings for FY14E and FY15E and we reiterate a BUY on the stock with a target of Rs 90 representing a potential upside of ~47.4% over a period of 18 months.

Buy Astral Poly Technik

Astral Poly Technik reported a whopping top line of 43.4% YoY to Rs 261.1 crore. PAT grew by 51.5% YoY to  Rs 29.2 crore on the back of strong sales and lower foreign exchange loss. The management has guided a top  line growth of 20-25% in FY14E on the back of its robust production capacity, introduction of new products  (bendable, blaze master, column pipe) and the commencing of production at Hosur plant with an initial capacity  of 15,000 MT. At the CMP of Rs 536, the stock is quoting at a P/E of 13.69x and 11.28x its FY14E and FY15E  earnings estimates. We believe that Astral Poly is well poised for growth in an exponential pattern and will  generate rewarding returns and we recommend a strong BUY on this stock.

Hold NMDC

NMDC‘s Q4FY13 results has surprised the market with higher top line on the back of accelerated sales volume, whereas price realization was almost flat at Rs 3889/ton vs Rs 3845/ton QoQ. We believe NMDC’s low-cost, highgrade iron ore resource base offers investors an attractively valued defensive investment opportunity (especially against Coal India) with volume growth driving earnings. However, volumes miss due to delays in expansion can be downside risk for the stock. At the CMP of Rs. 116 the stock is trading at 6.9x and 6.5x its estimated earnings for FY14E and FY15E and we recommend a HOLD on the stock.

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