S.Chand & Company Ltd - Providing the syllabus for growth: Angel Broking

Views of Mr. Jaikishan J Parmar(Research Analyst- Mid-Caps, Angel Broking):

"S.Chand & Company Ltd (SCCL) is a leading text book publisher and operates as an education content provider in India. The company develops and delivers content, solutions, and services in the education K-12, higher education, and early learning segments. It offers 55 consumer brands such as S.Chand, Vikas, Madhuban, Saraswati, Destination Success, etc. and has strong presence in CBSE, ICSE and State Board affiliated schools. SCCL's K-12 segment contributes ~72.5% to the revenue and the balance is from Higher education and others segments.

In terms of valuation, the pre-issue works out to 3.0x of FY2017E P/BV (at the upper end of the issue price band), which is lower compared to its peers (Navneet is trading at 6.3x its FY2017E P/BV). Also, SCCL's EV/sales multiple 3.2x is at a discount to Navneet's 3.7x. On EV/EBITDA front too, SCCL issue appears to be attractive at 13.4x v/s 16.3x of Navneet. However, the return on invested capital for S.Chand and Navneet both is in the range of 28-30%. Hence, considering the company's leadership position in K-12 market, strong brand recall and pan India reach along with higher revenue/PAT growth (revenue/PAT grew at a CAGR of 33%/36% over FY2012-16 v/s 11%/7.5% of Navneet), we believe that SCCL is rightly placed for further growth. Thus, we recommend a SUBSCRIBE on the issue."

Source : Equity Bulls

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