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  • 19 May 2022
  • ICICIdirect Research

NAVNEET EDUCATION REPORTS STRONG OPERATIONAL PERFORMANCE

NAVNETEDUL - 139 Change: -2.03 (-1.44 %)

News: Navneet Education (NEL) reported an improved financial performance with revenues registering YoY growth of 49 % to Rs. 322 crore for Q4FY22 (QoQ growth of 38%). Gross margin declined 334 bps YoY at 56.4%%. Owing to operating leverage, staff cost (as percentage of sales) declined 288 bps to 15.4% and other expenses to sales ratio was lower by 254 bps YoY to 21.5%. NEL reported an EBITDA margin of 19.5% (Q3FY22 7.7%) with absolute EBITDA of Rs. 63 crore vs EBITDA of Rs. 37.6 crore in Q4FY21. Consequently, PAT after extraordinary items was at Rs. 41.3 crore vs. net profit of Rs. 18.9 crore in Q4FY21

Views: 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 company expects double digit growth in stationery revenues. Also, domestic stationery, which was a laggard, saw a revival in Q4FY22 with domestic stationery revenues increasing from Rs. 44 crore in Q4FY21 to Rs. 97 crore in Q4FY22. NEL is also expanding its presence in the digital content segment, which has gained significantly owing to the pandemic. Strong stationery business prospects and publication segment returning to normal augurs well for Navneet. NEL 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

Impact: Positive