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MT Educare Ltd Research Report - 21st Jan 2016

Education | Published on Nov 07th 2015

IT

For 2QFY2016, MT Educare reported results above our estimates. The company’s top-line growth was strong mainly due to firm growth in Robomate product sales as well as Government Projects segment. However, the core coaching business was subdued during the quarter. On the operating front, the company saw pressure due to increase in other costs. However, higher other income and a lower tax expense boosted the company’s overall profitability. Strong growth in Robomate product sales and Government Projects segment boost overall consolidated top-line: For the quarter, MT Educare registered a doubledigit growth in its top-line, ie of 26% yoy to ~Rs83cr, on back of strong growth in Robomate poduct sales (at Rs17.6cr) as well as in the Government Projects segment. However, the core coaching business was subdued during the quarter. PAT grew ~21% yoy: Despite of operating margin pressure, which was on account of higher other costs, MT Educare posted a net profit growth of ~21% yoy to ~Rs14cr, owing to strong revenue growth, higher other income and lower taxes. Outlook and valuation: We expect MT Educare to report a strong top-line and bottom-line growth in the coming financial years (FY2016E and FY2017E) on back of healthy growth in coaching business (school, science and commerce). This would be owing to its strong brand image and with it implementing innovative teaching technologies. Further, we expect additional revenue growth from execution of government projects, Robomate product, and tie up with Shri Gayatri Educational Society (SGES) in Hyderabad which has a model similar to preuniversity (PU) colleges. Hence, we recommend a Buy rating on the stock with a target price of Rs169.

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CMP 134
Target Price 169
Investment Period12 Months

Stock Info

MCAP BSE (Rs in Cr)462.52
MCAP NSE (Rs in Cr)460.33
P/E (x)14.43
EPS (Rs.)8.05
BV (Rs.)41.05
Div Yield (%)1.72
FV (Rs.)10.00
P/BV (x)2.76
EV/Sales (x)1.57
EV/EBITDA (x)8.49

Shareholding Pattern (%)

Promoter43.0
Public & Others28.0
Foreign22.0
Corporate6.0
Institution1.0
Grand Total100.0

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