Sharekhan puts 'buy' on Navneet Publications; target Rs 80
Sharekhan has upgraded their recommendation to 'buy' from 'hold' on Navneet Publications with a revised price target of Rs 80.
By ET Online |
MUMBAI: Sharekhan has upgraded their recommendation to 'buy' from 'hold' on Navneet Publications with a revised price target of Rs 80, at which the stock discounts its 2009-10 EPS of Rs 7.6 by 10.5x. The company���s Jan-Mar 2007-08 results are ahead of the brokerage expectation.
The net sales for the quarter grew by a robust 29.5 per cent year on year to Rs 59.1 crore, which is ahead of their expectation of Rs 53.1 crore. The sales growth was on account of hefty growth in publication and stationery businesses.
The publication business witnessed a robust growth of 28.5 per cent year on year to Rs 21.8 crore. The stationery business achieved a healthy growth of 33.8 per cent to Rs 38 crore, mainly on account of good domestic demand and introduction of non-paper stationery products.
The operating profit margin declined by 102 basis points to 9 per cent, mainly on account of a higher other expenditure, as this, as a percentage of the sales increased by 313 basis points to 26.2 per cent in Jan-Mar 2007-08. An additional promotional expenditure of Rs 1.5 crore towards the stationery business led to a steep hike of 47 per cent in the other expenditure to Rs 15.9 crore.
The other income for Jan-Mar 2007-08 stood at Rs 1 crore as compared to Rs 0.5 crore last year. A higher other income coupled with a lower incidence of tax led to a 57.1 per cent growth in the reported net profit to Rs 2.1 crore.
The publication segment, which is one of the major revenue contributors will achieve a moderate growth, as in 2008-09 revision of syllabus is due only for a few standards in the states of Gujarat and Maharashtra. However, the growth in near future will be driven by some of the new initiatives undertaken by the company, such as introduction of non-paper stationery products, foray into Urdu publication and e-learning business, says Sharekhan.
At the market price of Rs 66.5, the stock is trading at 8.8x its 2010E earnings per share and at an enterprise value (EV)/earnings before interest, depreciation, tax and amortisation (EBIDTA) of 5.7x.
The net sales for the quarter grew by a robust 29.5 per cent year on year to Rs 59.1 crore, which is ahead of their expectation of Rs 53.1 crore. The sales growth was on account of hefty growth in publication and stationery businesses.
The publication business witnessed a robust growth of 28.5 per cent year on year to Rs 21.8 crore. The stationery business achieved a healthy growth of 33.8 per cent to Rs 38 crore, mainly on account of good domestic demand and introduction of non-paper stationery products.
The operating profit margin declined by 102 basis points to 9 per cent, mainly on account of a higher other expenditure, as this, as a percentage of the sales increased by 313 basis points to 26.2 per cent in Jan-Mar 2007-08. An additional promotional expenditure of Rs 1.5 crore towards the stationery business led to a steep hike of 47 per cent in the other expenditure to Rs 15.9 crore.
The other income for Jan-Mar 2007-08 stood at Rs 1 crore as compared to Rs 0.5 crore last year. A higher other income coupled with a lower incidence of tax led to a 57.1 per cent growth in the reported net profit to Rs 2.1 crore.
The publication segment, which is one of the major revenue contributors will achieve a moderate growth, as in 2008-09 revision of syllabus is due only for a few standards in the states of Gujarat and Maharashtra. However, the growth in near future will be driven by some of the new initiatives undertaken by the company, such as introduction of non-paper stationery products, foray into Urdu publication and e-learning business, says Sharekhan.
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At the market price of Rs 66.5, the stock is trading at 8.8x its 2010E earnings per share and at an enterprise value (EV)/earnings before interest, depreciation, tax and amortisation (EBIDTA) of 5.7x.
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