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Navneet Education reports improved operational performance

News: Navneet Education reported improved financial performance for Q2FY22 with revenue for the quarter at 93% of pre-Covid level. Revenues grew by 43% YoY to Rs.229 crore (Q1FY22 Rs.318 crore, Q2FY21: Rs.160 crore, Q2FY20: Rs.247 crore). Gross margin was lower by 21 bps YoY at 52.4%. However, decline in staff cost (as % of sales) by 487 bps to 16.1% and other expenses to sales ratio declining by 349 bps YoY to 22.4% led to EBITDA margin improving by 815 bps YoY to 13.9% with absolute EBITDA being higher by 3.5x YoY to Rs.31.8 crore. Consequently, PAT increased by 8.9x YoY to Rs. 22.6 crore.

Views: The key to sustained improvement in NEL’s performance will depend on schools reopening across all states and for all standards. The reopening of schools would lead to a recovery in the publication segment revenues which is expected to result in improved profitability for the company. Demand for stationery exports continues to remain strong and the management expects stationery exports to reach pre-covid level sales in FY22 (Stationery exports in FY20: | 492 crore). Navneet has over the years, maintained balance sheet prudence having a virtually debt free status which will aid in tiding over the current challenging market scenario