Prabhudas Lilladher has given Accumulate recommendation for Navneet Education with a target price of Rs. 92 in its research report issued on May 31, 2021
Prabhudas Lilladher’s research report on Navneet Education
While our FY22E estimates have undergone a massive change as 2nd COVID wave has coincided with start of the academic session (similar to 1st wave); the extent of earnings cut for FY23E is not that steep as we expect normalcy to set in by next academic cycle. Though near term outlook is uncertain, management hinted that FY22E is likely to be much better than FY21 on revenue front as 1) staggered opening is expected by June/July in Maharashtra & Gujarat and 2) demand in stationary export business (sales expected to be at FY20 levels of ~Rs5bn odd) continues to remain strong. Further, NELI has also lined up aggressive expansion plans in the Ed-Tech space (launched Digi-Book, Kids Platform and Teachers Online Course) which we believe is a step in right direction as digital learning is expected to become even more relevant post-COVID.
Amid expected normalcy from FY23E and renewed focus on Ed-Tech, we maintain ACCUMULATE with a revised TP of Rs92 (earlier Rs98) valuing the stock at 10x FY23 EPS of Rs9.2.