Prabhudas Lilladher's research report on S Chand and Company
S Chand’s operational performance was sub-par with EBITDA loss of Rs340mn (PLe loss of Rs263mn) due to lower GM of 35.5% amid RM cost inflation. However, as most states have started physical classes from Feb, management is hopeful that the upcoming sales season in 4Q will be COVIDfree after a gap of 2 years. After having managed a successful turnaround in FY21 (break-even achieved after reporting losses in FY19 & FY20), NCF implementation remains a key factor to monitor (announcement expected in FY23) as it would set the growth trajectory for next 2-3 years. Given lingering uncertainty regarding the implementation date we have cut our FY23/FY24 EPS estimates by 12%/3% respectively.
Outlook
Nonetheless, we continue to maintain our positive stance on S Chand and retain BUY with a revised TP of Rs159 (Rs147 earlier) valuing the stock at 8.5x (no change) FY24EPS as 1) the upcoming COVID-free sales season would see the company back in black in FY22 after reporting losses in last 3 fiscals 2) strengthening BS (reduction in net debt to Rs1.6bn in 3QFY22 with an aim to be net debt free by 4QFY23) 3) improved NWC metrics and 4) rising focus on EdTech (contribution to rise to 20-25% in next 3 years).
More Info on Trent
At 14:51 hrs S Chand and Company Limited was quoting at Rs 116.50, down Rs 2.00, or 1.69 percent.
It has touched an intraday high of Rs 121.55 and an intraday low of Rs 115.40.
It was trading with volumes of 4,888 shares, compared to its thirty day average of 15,099 shares, a decrease of -67.63 percent.
In the previous trading session, the share closed down 1.62 percent or Rs 1.95 at Rs 118.50.
The share touched its 52-week high Rs 149.40 and 52-week low Rs 63.65 on 13 October, 2021 and 09 February, 2021, respectively.
Currently, it is trading 22.02 percent below its 52-week high and 83.03 percent above its 52-week low.
Market capitalisation stands at Rs 408.25 crore.
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