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Prabhudas Lilladher Report
S Chand and Company Ltd. reported a decent performance with profit after tax margin of 36.7% (our estimate of 35.5%) on the back of strong tailwinds from school re-openings coupled with a price hike of ~5-10% taken across product portfolio.
Management commentary for FY23E is bullish with a top-line guidance of Rs 6,000 million plus complemented by a price hike of 12-15%.
However, given persistent raw material cost inflation gross margin can be under pressure prompting us to cut our earnings per share estimates by 37%/12% for FY23E/FY24E as we re-align our cost of goods sold assumptions.
Subsequent to turning profit after tax positive after a gap of three years, we believe S Chand's turnaround is complete and the company is back on growth track.
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