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Target: ₹121
CMP: ₹92.25
While Navneet Education Ltd's (NELI)top-line was ahead of our estimates due to swift recovery in stationary exports; GM at 53.8 per cent was broadly in-line with our expectation.
Though syllabus change schedule for FY23 is not exciting, given last academic cycle was impacted by Covid usage of sedond-hand books can be lower aiding growth in publishing segment.
On the other hand, management commentary on stationary exports continues to remain bullish and top-line CAGR of 25 per cent is envisaged over next 3-4 years. Apart from strong tailwinds in publishing & stationary exports,
NELI has intensified focus on Ed-Tech. Besides ear-marking ₹60 crore towards spends in Navneet Future Tech, additional investment of ₹37.50 crore will be made in SFA, a sports tech company in FY23.
While we cut our EPS estimates by 15 per cent/6 per cent for FY23/FY24 to account for increased spends in Ed-Tech we maintain our BUY rating on the stock with a target price of ₹121 (12x FY24 EPS; no change) amid expected normalcy in publishing business as schools have re-opened; strong growth momentum in exports; and increasing focus on Ed-Tech.
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