Buy S Chand and Company; target of Rs 305: Prabhudas Lilladher

Buy

Prabhudas Lilladher's research report on S Chand and Company

SCHAND reported strong performance in 3QFY25 with GM of 70.3% (PLe 55.0%) and EBITDA loss of Rs192mn (PLe loss of Rs314mn) led by 1) introduction of semester system (aids in volume & realization) for grades 11th and 12th in West Bengal and 2) multiple content syndication deals. The management reaffirmed its FY25E guidance of double-digit revenue growth with EBITDA margin of 17- 19% supported by 1) single-digit price hike, 2) RM cost stabilization, and 3) anticipated volume delta arising from phased rollout of the new NCF. Although adoption of NCF-aligned content has been gradual, with NCERT announcing new syllabus books only for grades K-to-3 and 6 so far, further announcements during the course of the year will drive higher adoption rate and aid revenue. Backed by these factors, we expect sales/PAT CAGR of 12%/16% over FY25EFY27E.

Outlook

SCHAND trades at attractive valuations of 7.5x/6.8x our FY26E/FY27E EPS estimates with FCFF yield of ~12%. We broadly maintain our estimates and retain ‘BUY’ with a TP of Rs305 valuing the stock at 11x (earlier 12x) as we roll forward our valuation to FY27E.

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S Chand and Company - 12022025 - prabhu