NAVNETEDUL - Navneet Education Limited Share Price

In the Q4 FY25 earnings call, management provided an optimistic outlook for Navneet Education Limited, despite facing challenges. They reported a marginal revenue growth of 2.5% for the fiscal year 2025, with the publishing segment growing by 3% and stationery by a slight margin. Management highlighted a significant expectation for future growth due to a curriculum change set to commence from FY26, which they believe will increase demand for publications.

Key forward-looking points include:

1. Growth Projections: Management anticipates an average volume growth of 10-11% for FY26, with publication growth at 6-7%, exports around 20%, and domestic stationery around 5-6%. They project a consolidated net profit of approximately 200 crores in FY26.

2. Curriculum Changes: The curriculum change across key states (Maharashtra and Gujarat) is expected to stimulate a recovery in publication sales, marking a pivotal point for growth in both the publication and profitability sectors.

3. Market Strategy: Management is focusing on non-paper stationery products to mitigate competition from the unorganized sector, with expectations for non-paper items to rise significantly from the current 8% contribution of total stationery revenue.

4. Export Scenario: While they anticipate growth due to exports, they expressed concern over potential tariffs from the U.S., with management noting that clients are currently in a "wait and watch" mode regarding new orders. They reported a successful growth of 12% in export stationery even amid price reductions due to falling paper costs.

5. Margin Expectations: They expect EBITDA margins to improve by 150-200 basis points in the publishing segment due to lower costs and strategic focus, while stationery margins are projected to stabilize around 12-13%.

Overall, management is confident in leveraging curriculum changes, expanding new product offerings, and enhancing distribution to drive growth in the coming years.

Major Q&A Highlights from Navneet Education Limited's Q4 FY25 Earnings Call

Question 1: "What is the revenue and profit from Indiannica in FY25 versus FY24?"

Answer: Our revenue from Indiannica was approximately Rs.55 crores for FY25 compared to Rs.59 crores in FY24. At the PAT level, we experienced a loss of Rs.6 crores, down from a loss of Rs.10 crores last year. EBITDA showed a loss of Rs.1.6 crores versus breakeven last year.

Question 2: "Can you explain why we should continue the Indiannica business given the prolonged losses?"

Answer: I acknowledge that Indiannica has not yet performed well financially. However, we see a crucial strategic shift as schools move from SSC to CBSE curricula. Although competition is intense, we believe maintaining focus on Indiannica can open new opportunities aligning with current curricular changes.

Question 3: "What is the sales profitability of Navneet RISE in 2025?"

Answer: Navneet RISE contributed around Rs.35 crores to our standalone publication sales for FY25. As schools shift to CBSE, we expect continued strong performance and growth from this series, especially in Maharashtra and Gujarat, where we maintain a robust market presence.

Question 4: "Can you summarize the volume and price growth expectations for FY26?"

Answer: We anticipate a volume growth of about 10-11% at a consolidated level. Our projection for publication growth is approximately 6-7%, around 20% for exports, and around 5-6% for domestic stationery. We expect that the bottom line will also grow by approximately 10% in FY26.

Question 5: "What are the expected EBITDA margins for the publications and stationery segments moving forward?"

Answer: For FY26, we expect EBITDA margins in the publication segment to improve by 150-200 basis points, while for stationery, we face challenges in margin improvement. Therefore, we maintain a steady state margin expectation of 12-13%.

Question 6: "Given the tariff situation in the U.S., what are the contract dynamics with your customers?"

Answer: We typically enter into yearly contracts with U.S. customers that fix product prices and expected volumes. Current contracts are set until August, while any changes based on tariff decisions will impact future contracts and volume expectations beyond this period.

Question 7: "What is the total debt and cash position of the company as of now?"

Answer: Our current debt stands at around Rs.30 crores, and we do not have cash on our balance sheet at the moment. The forecast suggests we will see maximum cash inflow by September due to seasonal business cycles.

Question 8: "In terms of market competition, how do you plan to improve market share in the face of challenges?"

Answer: We recognize the intense competition is primarily due to aggressive discounting by smaller publishers. Rather than competing on price, we aim to differentiate by enhancing our product offerings and introducing innovative digital solutions for schools to boost customer loyalty.

These questions and answers encapsulate the essential insights shared during the earnings call.