S Chand and Company shares rallied nearly 5 percent intraday Thursday after global brokerage house Credit Suisse has initiated coverage on the stock with outperform rating.
The research firm has set a target price at Rs 625 per share, implying 29 percent potential upside from Wednesday's closing price.
S Chand is the largest player in attractive Indian education content market with a strong track record and is also a leading player in K-12 education content market.
Credit Suisse expects compounded growth rate of 14 percent, 13 percent and 25 percent for revenue, operating income and earnings per share over FY17-20, respectively.
Lower borrowing cost and tax rate will accelerate earnings per share, said the research house while estimating 4 percent free-cash-flow yield in FY19.
S Chand is looking at two acquisitions in Western India state board and Cambridge international board.
Credit Suisse said positives factors are large and young population, growth of private schools and increasing share of education in consumers' discretionary budget while high seasonality and digital disruption are key risks to the stock.
The company recorded a loss of Rs 10.19 crore for quarter ended September 2017 against loss of Rs 11.42 crore in year-ago. Revenue from operations fell sharply to Rs 17.36 crore from Rs 28.08 crore YoY.
At 11:10 hours IST, the stock price was quoting at Rs 490.70, up Rs 6.90, or 1.43 percent on the BSE.
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