Navneet Education Q3 Results Review - Higher Sales Return Derails Publishing Growth: Prabhudas Lilladher
Navneet Education is still awaiting curriculum change announcement schedule for FY25E indicating volumes would continue to remain under pressure.
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Prabhudas Lilladher Report
Navneet Education Ltd.'s FY25E/FY26E earing per share estimates by 14%/12% as we re-align our assumptions for publishing business amid rising growth challenges in the near term.
Navneet Education reported weaker than expected performance with Ebitda margin of 1.6% (PLe 9.1%) as publishing top-line declined by 7.2% YoY led by higher sales return of Rs180 million amid rising prevalence of second hand books. Higher than expected sales return for two quarters is likely to result in rising provision buffer going ahead.
In addition, Navneet Education is still awaiting curriculum change announcement schedule for FY25E indicating volumes would continue to remain under pressure. Consequently, we expect publishing business to grow at a compound annual growth rate 7% over FY23-FY26E as realisation of national curriculum framework benefits will be back ended.
We expect sales/profit after tax CAGR of 8%/21% over FY23-FY26E and retain ‘Buy’ rating with revised sum of the parts based target price of Rs 182 (earlier Rs 206) as we cut our core business target multiple to 11 times (earlier 12 times) amid delay in realisation of NCF benefits.
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