Buy Navneet Education; target of Rs 192: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Navneet Education has recommended buy rating on the stock with a target price of Rs 192 in its research report dated August 06, 2023.

Broker Research

August 07, 2023 / 21:21 IST

Buy

Prabhudas Lilladher's research report on Navneet Education

We increase our FY24/FY25E EPS estimates by 10%/19%, as we cut our Ed-Tech loss assumptions to Rs400mn/Rs300mn over next 2 years given the expansion strategy is under review. Strategic review is an indication losses are likely to narrow down resulting in an earnings upgrade. In a seasonally strong quarter, NELI reported decent performance with topline of Rs7,915mn (PLe Rs7,937mn), while EBITDA margin of 26.4% was above our estimate led by better than expected profitability in publishing division. Turnaround in Indiannica business (expected to be profitable in FY24E), back ended recovery in GM amid softening paper prices, narrowing losses in Ed-Tech and impending benefits from NEP is expected to result in sales/PAT CAGR of 12%/35% over FY23-FY25E.

Outlook

We retain ‘BUY’ with a SOTP based TP of Rs192 (refer exhibit 6 for more details) as we increase core business target multiple to 12x (10x earlier) and roll forward to FY25E.

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