Prabhudas Lilladher's research report on S Chand and Company
SCHAND reported an in-line operating performance with EBITDA margin of 43.1% (PLe 42.2%) while there was a narrow miss at bottom-line level due to higher-than-expected tax rate of 26.7% (PLe 21.9%) amid non-recognition of DTAs in subsidiaries. Management expects revenues to surpass Rs8,000mn with EBITDA margin of ~18-20% in FY26E led by 1) 5-7% increase in volumes as NCERT is expected to announce new syllabus books for grades 4,5,7&8, 2) multiple content syndication deals and 3) single digit price hike across product portfolio. Backed by these factors, we expect sales/PAT CAGR of 11%/21% over FY25E-FY27E.
Outlook
SCHAND trades at attractive valuations of 9.7x/8.7x our FY26E/FY27E EPS estimates with FCFF yield of ~9%. We have cut our EPS estimates by 3%/2% for FY26E/FY27E as we re-align our tax rate assumptions and retain ‘BUY’ with a TP of Rs286 valuing the stock at 11x FY27E (no change in multiple).
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