Result Update: MT Educare Ltd - SELL - TP Rs.70

MT's operating revenue for the quarter grew at 12.7% yoy to Rs 661 mn primarily on account of higher growth in working capital intensive skill development segment. The Robomate business continued to disappoint with 50% yoy decline in the quarter. In the year, the company could achieve Rs 210 mn revenue in the segment as against revised target of Rs 300 mn, despite aggressive branding exercise which dragged its margins for the full year. The fee income for the quarter also declined by 20% yoy on decline in student counts in school segment. The interest expenses grew by 293% yoy to Rs 57.1 mn on increased working capital, which has resulted in higher gross debt at ~Rs 1.5 bn Vs Rs 1.15 bn on qoq. We believe that below expected performance in Robomate, decline in fee income and rise in debt are causes of concern We have cut FY18E earnings estimates by 38% factoring in slower growth, lower margins and higher interest expenses. We have been maintaining cautious view on the stock for past few quarters and we do not see any major recovery in the performance in next few years. We discontinue our coverage on the stock with Sell rating (Vs Reduce earlier) with revised target price of Rs 70 (Vs Rs 106 earlier).

Shares of MT EDUCARE LTD. was last trading in BSE at Rs.72.4 as compared to the previous close of Rs. 75.7. The total number of shares traded during the day was 81067 in over 776 trades.

The stock hit an intraday high of Rs. 77.2 and intraday low of 72.05. The net turnover during the day was Rs. 5944290.

Source : Equity Bulls

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