S Chand vs Navneet

Coming from a Leading Book Publisher, S Chand and Company IPO plans to raise Rs 400 crore through a fresh issue and also Rs. 325 crore through offer for sale of about 2.66 million shares. S Chand and Company IPO is scheduled to open on April 26 and close on April 28. The IPO comprises of fresh issue of equity shares amounting to Rs 325 crore. Existing shareholders will offload 6,023,236 shares as part of offer for sale (OFS). At the upper end of the price band of Rs. 660-670, S Chand and Company IPO issue is expected to fetch Rs 728.55 crore. S Chand and Company peer analysis attempts to assess its financial strengths vis a  vis its major competitor Navneet Publications.

S Chand and Company in Brief:

Incorporated in 1970, S Chand and Company Limited is one of the Leading Book Publishing and education content company which delivers content, solutions and services across the education life cycle through K- 12, higher education and early learning segments. S Chand and Company is the leading K-12 education content company in terms of revenue from operations in Fiscal 2016, according to Nielsen, with a strong presence in the CBSE/ICSE affiliated schools and increasing presence in the state board affiliated schools across India. As of December 31, 2016, S Chand and Company offered 55 consumer brands across knowledge products and services including S. Chand, Vikas, Madhubun, Saraswati, Destination Success and Ignitor.

Navneet Publications in Brief:

Navneet Education Limited (NELI), founded by the Gala family, is in the business of (a) publishing – educational, supplementary, children’s and general books, (b) stationery products, and (c) digital education. It derives 54% of its revenue from publishing and 43% from stationery. NELI’s products are sold under the brand names Navneet, Vikas, Gala, Grafalco, Boss, Youva and eSense. It recently acquired Britannica India’s curriculum business which is synergistic to its CBSE curriculum business . Navneet also did  buyback of shares to tune of INR 58crores in Jan 2017.

Revenue Mix: S Chand and Company Peer Analysis

schand vs navneet revenue Mix

A good portion of Navneet Education Ltd revenues comes for stationary while Educational Books contribute about 52% of its revenue.  In case of S Chand K-12 segment is accounting for 72% of its revenue and rest comes from test preparation, College/professional Books , early learning books etc.

S Chand and Company Peer Analysis: Financials: 
Particulars / (Rs. In Crore)Navneet FY2016S Chand  Fy2016
Revenue from Operations931.12537.754
Revenue Growth (%) yoy13%
PBIDT218.93128.216
Profit Before Tax194.4172.655
Net Profit as restated127.846.642
Net Profit Margin13.73%8.67%
Share Capital47.6414.92
Reserves534.64483.798
Net worth582.28484
NAV Per Equity share (Rs.)24.45162.16
Face Value25
EPS5.3717.1
Market Price / IPO price 169.85670
Price to Earning (PE)31.6639.18
Post isse Equity17.348
PE on Post Issue Equity (17.35 cr)49.84
Chayya Profit in 2016 (aquired Dec 2016)30.23
Net Profit  of S chand + 74%  fo Chhaya Profit 2016 69.01
PE Post Issue Equity w Chhaya added33.68
RoNW (%)21.95%9.64%
ROCE (%)28.07%14.90%
ROE  (%)21.04%7.80%
Cagr sales  3 yr5.624.45%
Cagr  PAT  1 yr18.48%42.37%
Cagr  PAT  3 yr4.18%13.38%
Market Cap40462065
Market Cap/Sales Ratio4.353.84
Interest Coverage Ratio42.614.19
P/BV6.954.41

Navneet Education has done buyback of shares in Jan 2017 amount to 9.27% of its equity which will further lead to improvement in various financial ratios of the company. 

The S Chand and Company peer analysis vis a vis Navneet Educations Ltd. shows that while overall it is  exhibited better growth in revenues and Net profit over last 3 years years ( cause: inorganic growth due to acquisitions) , its financial ratios right from Net profit Margin to Return on Net worth are below those of Navneet Education. Interest Coverage Ratio of Navneet Education is much superior to S Chand indicating high indebtedness of S Chand and co. However it may be noted that S Chand and Company acquired 74% stake in Chhaya Prakashni in Dec 2016. The 2016 figures of S Chand and Company do not include profits and revenue of Chhaya in which S Chand and Company has bought 74% stake.  If this is taken in account S Chand and Company Net profit will increased and offer is value at a PE of 35 on Post issue share capital and other ratios will also change. 
While S Chand & Company is a recognized brand and enjoys Good Degree  of leadership in certain segments like  K12 (CBSE/ICSE) and Professional/technical Publications, the IPO price being asked is somewhat  steep and listing gains may get impacted by market conditions.

See Related Posts S Chand and Company IPO Review  and S Chand and Company IPO: Consolidated Brokerage Views & Run up to IPO

Disclaimer: I am not a SEBI registered analyst. I may have vested interest in every stock I discuss. Please do your own due diligence as stock market investments have high degree of inherent risk.