Buy Navneet Education; target of Rs 195: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Navneet Education has recommended buy rating on the stock with a target price of Rs 195 in its research report dated November 07, 2023.

Broker Research

November 10, 2023 / 14:48 IST

Buy

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Prabhudas Lilladher's research report on Navneet Education

We cut our EPS estimates by 16%/2%3% for FY24E/FY25E/FY26E as we realign our assumptions for publishing business amid rising growth challenges in near term. While operating profitability has undergone a downward revision in the band of ~6-11% over FY24E-FY26E, impact on bottom-line is miniscule as we adjust our tax rate forecast given demerger of Ed-Tech business into Navneet which has accumulated losses of ~Rs0.8-1bn. Navneet reported weaker than expected performance with EBITDA loss of Rs43mn as publishing business reported a 46% YoY fall in top-line led by higher sales return, change in paper pattern of Gujarat board and rising prevalence of 2nd hand books. Though there are near term challenges 1) turnaround in Indiannica business (expected to be profitable in FY24E), 2) narrowing losses in Ed-Tech and 3) impending benefits of NEP is expected to result in sales/PAT CAGR of 10%/26% over FY23-FY26E.

Outlook

We retain ‘BUY’ rating with a SOTP based TP of Rs195 (refer exhibit 6 for more details).

For all recommendations report, click here