S Chand - A possible rerating compounder

Hi all
We have all heard the phrase rags to riches - but S Chand is a riches to rags story. After having debuted on the Exchanges at 670 after its IPO in 2017 it is now languishing at 60Rs. Marquee names like HDFC, Everstone and IFC are invested.
The reason I bring in this disaster story is that sometimes a stock can rise like the phoenix.
The basic problem with this stock was that it compounded profits at north of 25% for last 5 years ending Mar 2018. However, it reported a loss in 2019 which is the reason for its dismal state today. How did this happen?
Well their receivables were too high. The company made classic case of buying growth ignoring the quality of growth. They have blamed the loss in 2019 on returns from sales channels due to the upcoming new education policy. That may have played a small part but I think a big part was the high receivables.
Howard Marks said that every company is a good investment at the right price - this is my main point here. The company has cut down on expenses, expects a modest increase in sales so would result in at least break even in Mar 2020 with a possible upside next year due to release of New Education Policy. Opinions invited…

Hi Milan,

I had also been tracking the company. Listened to their concalls, but the new education policy reason they gave for sudden increase in receivables didn’t sound convincing. I checked the corresponding quarter results for Navneet Education and didn’t find any decrease in Navneet’s profitability.

Also, in the concalls management was asked about why promoters are not buying at such low prices. Again they were non committal and not convincing. I gave up since if you can’t trust management, even if the business does well, how can one be sure management would share the upside with minority shareholders.