NAVNETEDUL - Navneet Education Limited Share Price

The management outlook for Navneet Education Limited emphasizes a stable revenue trajectory, with Q1 FY26 revenues remaining consistent with the previous year's performance. The Managing Director, Mr. Sunil Gala, noted a flat performance in the publication business due to minor curriculum changes, particularly the delayed release of Grade 1 textbooks in Maharashtra, which is expected to impact revenue positively in Q2. They anticipate a more robust growth trajectory starting next year as curriculum changes will occur across higher grades in both Maharashtra and Gujarat, aligning with the National Education Policy (NEP) 2020.

Specific forward-looking points include:

1. Revenue Growth: Management is optimistic about achieving a 15% growth in the publication business next year as more than two grades are set to change in both states.

2. Margin Improvement: They expect to see EBIT margins increase from 25% to around 27% within the next couple of years, driven by revenue growth and the gradual reduction of losses associated with digital products.

3. Digital Strategy: The allocation for digital content creation is estimated at Rs.8 to Rs.9 crores, with total digital-related expenses projected around Rs.15 to Rs.17 crores annually.

4. CAPEX Plans: The company plans to invest approximately Rs.90 crores this year and potentially Rs.150 crores next year, contingent on the market environment and export opportunities.

5. Stationery Market: Management remains cautiously optimistic about the domestic stationery segment, despite a 14% decline in Q1 due to competitive pricing pressures and paper cost reductions. They believe the stabilized paper prices will mitigate competition and potentially improve margins in the coming quarters.

6. Export Strategies: The company is navigating uncertainties regarding U.S. tariffs cautiously but remains committed to maintaining its position as a preferred vendor despite potential shifts in trade conditions.

Overall, the management's confidence in upcoming growth amidst current challenges reflects a strategic focus on curriculum changes, digital integration, and market expansion.

Question 1: Can you give some numbers on how much revenue was delayed in rupees crore or percentage that would be useful or you can also likewise what was a like-to-like growth on in this quarter on a YoY basis?

Answer: The growth normally comes from curriculum changes, and due to late publication releases in Maharashtra, we expect Q2 growth to be around 3%-4%. Grade 1 contributes about 5%-6% to our total publication business. Therefore, even with significant growth in Grade 1, overall revenue impact is limited. Good repeats in sales should lead to slightly better growth beyond this initial 3%-4%.

Question 2: On the stationary side, if you're selling at say, Rs.100 to the customer, how much would the shelf price be for the customer when you sell to them?

Answer: When we sell at Rs.100, retailers typically add around a 50% markup, meaning the end customer often pays between Rs.200 to Rs.250. This includes operational costs and margins for retailers and distribution.

Question 3: Our publication revenue has been flat while EBIT margins dropped from 35% to 25%. Why?

Answer: The margin decline is primarily due to inflationary costs rising alongside flat revenues. Additionally, digital expenses, now factored into our standalone operations versus previously in subs, have impacted profitability. Our digital strategy is crucial for sustaining our print business, hence these expenses are necessary.

Question 4: What kind of revenue growth and what margin can we expect from the publication business for FY26 and FY27?

Answer: We anticipate at least a 15% revenue growth for FY27 in the publication business with the introduction of curriculum changes in both states. Margins should improve by around 2%, targeting 27% EBIT margins, influenced by rising usage of our digital products, though we don't foresee returning to 35% margins soon due to ongoing digital expenses.

Question 5: What's the revenue and loss for Indiannica in Q1 FY26?

Answer: In Q1 FY26, Indiannica reported a revenue of around Rs.3 crores, and a loss of Rs.7 crores. Typically, Q4 is the strongest quarter; other quarters usually yield negligible revenues.

Question 6: What is expected CAPEX for this year and next year?

Answer: This year, we expect a CAPEX of about Rs.90 crores. For the following year, we initially planned for Rs.150 crores, but this will depend on export opportunities and market conditions. Thus, we may adjust this figure based on the current business environment.