Technology

MT Educare’s results for 3QFY2016 came in-line with our estimates. The
company’s top-line growth was strong mainly due to firm growth in Robomate
product sales as well as in the Government Projects segment. However, the core
coaching business was subdued during the quarter. On the operating front, the
company reported margin improvement which led to higher 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 ~25% yoy to ~Rs71cr, on back of strong growth in
Robomate product sales as well as in the Government Projects segment. However,
the core coaching business was subdued during the quarter.
PAT grew ~34% yoy: MT Educare posted a net profit growth of ~34% yoy to
~Rs8cr, owing to strong revenue growth and higher other income.
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. However, we believe that currently all positives are
already factors in stock prices. Thus, we recommend a Neutral rating on the stock.

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