Valuations are quite personal tbh but just to tell you how I look at it, it is trading 4x market cap to cash flow. The company is reducing its expenses and focusing on better cash conversion. The near term triggers like NCE/NCF Implementation might help the company to grow 20-25% for couple of years from current levels, in this scenario, the bottom line will grow much faster than top line.
While valuing I considered above points and added some margin of safety due to underlying risk and past track records before coming to a right valuations for me(There is no right answer). At the end, itâs a game of probabilities.
Disc: Invested, no recommendations
8 Likes
Some of the things which came to my mind -
During my school years, SCHAND books mostly came into my radar after 9-10th when focus shifted away towards science and mathematics stream. With the NEP, initial sense that I have got is that focus would be on wholistic dev of child and new age tech stuff and that would lead to more educational material related to -
- Giving proper knowledge of history of India and world
- Bolstering multi disciplinary thinking in child
- Focus on ethics and values in child
- Focus on life skills
- Focus on ethics and values in child
- Focus on new age technology skills
Initial sense I have gotten is that new curriculum will add new stuff to what is currently in the educational system and there will be some modifications as well. I do not know if there will be significant modification in science and maths where SCHAND is strong per my experience. Ofcourse I do not have any experience with other streams - Arts and Commerce if SCHAND books sell there as well or not.
Also, in the past CBSE used to say to schools that use NCERT books to teach students. And over time NCERT books got better as well to cover more material. If NEP comes, there can be similar risk again where NCERT updates all the curriculum and initially students flock to buy more NCERT material until SCHAND authors catchup. Some random thoughts while thinking what are NEP related risks⌠(can prove to be completely wrong)
6 Likes
Q1FY23 Revenue is 107 cr. Itâs very nice to see the management is walking the talk. Last concall they said they should be able to do 90 cr revenue in Q1FY23 and also told the reasons that made sense. Now itâs showing in numbers too. Hope they will be able to meet the guidance given for FY23 excluding NEP/NCF being implemented.
7 Likes
In the recent concall, the management stated that they wish to focus on their core publishing business rather than edtech businesses. They mentioned additional spends on edtech business wonât scale the revenues by significant amount. Hence, they will cut back on edtech spends.
Secondly, they mentioned that paper was no more available on credit to entire publishing industry. This will really help the big players becoming bigger, if the big players will be able to secure raw material timely and lead to market share gains. So far, they have secured most of the raw material supplies for the year and only 20% or so it left to be procured. (They import paper and buy from West Coast, Kuantum Papers in the domestic markets). Paper cost is 20-25% of their total cost as highlighted by management in the concall.
9 Likes
testbook was sold for 15 cr recently. according to q1fy23 concall
2 Likes
This stock is making a strong comeback. Significant improvement in fundamentals (both in P&L and Balance sheet). After multiple years of under-performance, looks like the company is poised for multi year growth. Their cash flows, debt and debtor days have shown remarkable improvement.
In the last quarter, FII âThe Miri Strategic Emerging Markets Fund Lpâ has taken 4.3% stake. Money control have included this stock in their latest coverage. https://www.youtube.com/watch?v=JhOLXeBFoNw
Anyone tracking this stock?
Disclosure: Invested
3 Likes
Yes, have been tracking.
Not sure if itâs a multi-year growth story - but looks undervalued for sure
- Q1 FY25 was a steady quarter despite national elections and heatwave impacting school operations
- Consolidated operating revenues were Rs 1,107 million, similar to Q1 last year
- Highest ever gross margins at 72% vs 69% last year
- EBITDA of Rs 84 million vs Rs 136 million last year
- Minor PAT loss of Rs 30 million vs Rs 11 million profit last year
- Lowest Q1 working capital metrics in company history - receivable days below 100 for first time
- Net cash position of Rs 882 million, up from Rs 600 million in Q4 FY24
- Engaged in content licensing partnerships with tech majors for Gen AI/LLM models
- Forging strategic partnerships in test preparation segment
- Focus on hybrid/blended learning model combining physical books and digital content
- Limited adoption of new NCERT curriculum by schools so far
- Expecting 40-50% adoption of new curriculum by schools this year if NCERT releases books on time
- Full adoption expected to take 2-3 years
- Expecting double-digit operating revenue growth in FY25
- Upgraded EBITDA margin guidance to 17-19% range
- Gross margins expected to be higher in FY25
- NCERT expected to release new syllabus books for more classes by end of 2024
- S Chand has books ready for all classes under new curriculum
- Timing of NCERT book releases crucial for adoption and revenue impact
- Full benefit of NCF expected to reflect in 2-3 years
- Focus on blended learning approach with digital supplements to physical books
- S Chand Academy, TestCoach and other digital platforms currently free, monetization expected in future
- New revenue stream from content licensing for AI models
- Maintaining strong cash position, not considering share buybacks currently
- May look at buybacks next year if cash reserves cross Rs 100 crore threshold
- Well-positioned to benefit from NCF implementation over next 2-3 years
- Focusing on blended learning and digital content alongside core publishing business
- Strong working capital management and cash position
- Confident of double-digit growth and margin expansion in FY25
4 Likes