Accumulate Navneet Education; target of Rs 93: Prabhudas Lilladher

Prabhudas Lilladher's research report on Navneet Education

NELI’s operational performance was better than our estimates led by revenue beat of 8.5% and stringent cost control. Management is hopeful that schools will re-open from November onwards in a phased manner and the academic year this time might get extended beyond March. Given delayed start to the academic year, publication revenue is expected to decline by ~20-30% in FY21E. While domestic stationary business is also expected to face headwinds, exports are likely to end on flattish note in FY21E. NELI has lined up aggressive expansion plans in the Ed-Tech space by ear-marking ~Rs1bn which we believe is a step in right direction as digital learning is expected to become even more relevant post-COVID.

Outlook

We keep our EPS estimates broadly unchanged (cut of 4%/2%/1% for FY21/FY22/FY23 respectively) and value NELI at 10.5x (no change) our estimated FY22 EPS of Rs8.9 to arrive at a TP of Rs93 (earlier Rs95). Retain ACCUMULATE.