Buy S Chand and Company; target of Rs 338: Prabhudas Lilladher

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Prabhudas Lilladher's research report on S Chand and Company

We increase our FY25E EPS estimates by 21% as NCF implementation would make second hand books market redundant and result-in significant volume delta. Further, given the overhaul in curriculum, we expect new SKUs to get launched providing additional volume kicker. Substantial yield advantage is also expected, as repricing at higher level becomes easier post curriculum revamp. We introduce FY26E projections, as we expect adoption of new curriculum to gather pace in a phased manner. We expect sales/EBITDA CAGR of 17%/26% over FY23-FY26E, as policy change is likely to result in secular growth for next 2-3 years. S Chand has a net cash BS and trades at attractive valuations of 9.5x/8.2x on our FY25E/FY26E EPS.

Outlook

We maintain ‘BUY’ with a revised TP of Rs338 (earlier Rs260), as we roll forward to Sep-25E (target P/E multiple intact at 12x).

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S Chand and Company - 29 -08 - 2023 - prabhu