JM Financial is bullish on S Chand and Company has recommended buy rating on the stock with a target price of Rs 645 in its research report dated June 01, 2018.
JM Financial's research report on S Chand and Company
S Chand reported a strong consolidated PAT of INR 1.1bn (92.5% YoY) for FY18, higher than JMfe/street estimates. EBITDA for FY18 came in at INR 1.9bn (+16.2% YoY), in-line with JMfe. Lower interest costs (led by deleveraging from IPO proceeds) and depreciation (change in accounting policy from WDV to SLM) further aided the earnings growth. The company has declared dividend of INR 1.5/share. Further penetration-led growth opportunities, strong execution of its inorganic growth strategy, scaling up of digital platform and a healthy balance sheet ideally positions the Company to benefit from the overall growth in India’s education sector.
We forecast a c.15% EBITDA CAGR over FY18-FY20E and value the stock at 9x EV/EBITDA FY20E to arrive at a fair value of INR 645/share, Maintain BUY.
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