Buy S Chand and Company; target of Rs 260: Prabhudas Lilladher

Prabhudas Lilladher's research report on S Chand and Company

S Chand & Company (S Chand) reported strong operational performance due to better than expected GM of 68.8% (PLe 61.0%) resulting from better print runs and low wastage. Consequently, bottom-line was in black for the first time ever in 1Q (base quarter PAT was Rs62mn amid a onetime gain of Rs98mn on revaluation of Smartivity Labs; adjusting for it losses were Rs36mn). For FY24E, management is guiding for a top-line of Rs7,200- 7,500mn with EBITDA margin of 16-18% backed by price hike, RM stabilization and increased volumes that would come from NCF roll-out. We keep our FY24E/FY25E EPS estimates broadly intact and expect sales/EBITDA CAGR of 13%/23% over FY23-FY25E. S Chand has a net cash BS and trades at attractive valuations of 11x/9x our FY24E/FY25E EPS with an expected FCFF yield of 14% in FY25E.

Outlook

We maintain BUY on the stock with a revised TP of Rs260 (12x FY25E EPS). Volatile RM prices and delay in NCF roll-out can act as a key risk to our call.