Hold Navneet Education target of Rs 139: Prabhudas Lilladher

Prabhudas Lilladher's research report on Navneet Education

We cut our EPS estimates by 7.8%/7.3%/6.7% for FY25E/FY26E/FY27E given near-term growth challenges in publishing division and rising competitive intensity in the domestic stationery market. NELI reported weak set of numbers with revenue miss of 5% and a break-even at operating level as publishing and domestic stationery business suffered amid fall in realization. The publishing division has been facing considerable growth challenges of late due to increasing usage of second hand books. While ~15 subjects from Grade 1 to 4 in Gujarat are likely to undergo a curriculum change in FY26E, we believe material volume delta would accrue only after higher grades witness a syllabus change.

Outlook

Further, declining ASP in the domestic stationery market indicates rising competitive pressure, while slow offtake in channel inventory is a reflection of weak demand environment. We expect sales/PAT CAGR of 11%/18% over FY25E-FY27E and retain ‘HOLD’ with revised SOTP-based TP of Rs139 (refer Exhibit 5 for more details).