Buy This Education Stock For 17% Gains Says ICICI Direct

SGX Nifty signals a weak opening for the Indian indices and there is F&O expiry that will keep volatility higher. Now for 12 months time, ICICI Direct has given its buy call on two stocks for gains of up to 24.83 percent.

Know about the stocks and the rationale as provided by the brokerage:

Buy Navneet Education (NEL) for 17% gains

ICICI Direct has suggested to buy this education based content provider for a 1-year period and target price of Rs. 125. This means gains of 16.93 percent from the last closing price of Rs. 106.90 per share.

About Navneet Education: The company also manufactures scholastic paper stationery for domestic and international markets. In the state of Gujarat and Maharashtra the company commands a 65 percent market share. The company is also into publishing CBSE board books in other states.

 

Q2fy22 results at the firm Navneet Education:

The company's results have been encouraging with revenues reaching 93 percent of the pre-Covid level. Revenues also soared 43 percent to Rs. 229 core but were lower sequentially in the previous quarter.

EBITDA margin improved 815 bps YoY to 13.9% due to operating leverage. EBITDA was higher by 3.5x YoY to Rs. 31.8 crore. Consequently, PAT increased by 8.9x YoY to Rs. 22.6 crore

Brokerage's advice to investors in respect of Navneet Education

In the last 3 years, the stock has underperformed with 3-year price CAGR at -10 percent. "NEL has a strong business model with dominant share in state board
supplementary books in Maharashtra and Gujarat. The company has strong return ratios and is reasonably valued.

Target Price and Valuation: We value NEL at Rs. 125 i.e. 12x FY23E EPS", says the brokerage house.

 

Alternate Stock Idea:

The company is also bullish on Trent given the inherent strength of brands (Westside, Zudio, Star, Zara) and proven business model. The company recommends a "BUY" on the stock with a target price of Rs. 1300/share.

Disclaimer:

The above stock is picked from the brokerage report of ICICI Direct. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.