SCHAND - S Chand And Company Limited Share Price

During the Q3 FY26 earnings call, management provided an optimistic outlook for S Chand and Company Limited, emphasizing several key forward-looking points.

1. Revenue Growth: The company targets operating revenues exceeding Rs.8,000 million for FY26, expecting a significant contribution from the upcoming fourth quarter, particularly as a large segment's revenues were delayed due to syllabus revisions.

2. EBITDA Margin: Management aims for an EBITDA margin in the band of 18%-20% for the fiscal year, reflecting a commitment to maintaining profitability through various operational efficiencies.

3. International Acquisition: The recent acquisition of CPD Singapore offers a robust entry into the international curriculum market, which presents a notable opportunity, with an estimated 1,000 schools in India and over 4,000 globally for IGCSE and approximately 6,000 for IB.

4. Growth from AI Dataset Licensing: The company anticipates AI dataset content licensing revenues to exceed Rs.300 million in FY26, up from Rs.195 million in FY25, reflecting strong growth potential in this segment.

5. Adoption of New Curriculum: Management projects maximum adoption of the new syllabus books in FY26 and FY27, which should enhance growth in the CBSE/ICSE markets. Continuous partnerships for content and licensing are expected to boost sales momentum.

6. Operational Efficiency: S Chand achieved the lowest net working capital and inventory days in Q3 in its history, with inventory days at 316 down from 366 in Q3 FY25 and net working capital days at 143 days down from 152.

7. Confidence in Q4 Performance: Management expressed confidence in achieving the targeted numbers, driven by business unit discussions and historical performance data.

In summary, management's outlook is characterized by optimistic revenue expectations, improved margins, strategic international expansion, and strong growth potential in emerging segments like AI, reinforcing their overall growth trajectory.

Question: Is the INR5.5 crores of interest payment from the IT refund accounted as part of the Q3 FY '26 results?

Answer: Yes, the INR5.5 crores of interest from the IT refund has been accounted in the Q3 FY '26 results. However, the actual cash has not been included in the books yet, as we received the money in mid-January, after recognizing the order in late December. Therefore, the cash will appear in the next quarter.

Question: Is there any outlook from management on going in for a buyback since our valuation seems depressed?

Answer: We will reassess our cash flow situation in May when we announce our final results. Current discussions on a buyback have not been initiated, but we remain open to it depending on our liquidity and internal discussions at the Board level.

Question: How does the NCERT's decision to focus on in-house printing and publication impact our sales pipeline?

Answer: NCERT has a long tradition of creating and distributing textbooks primarily for government schools. Their recommendation for schools to use NCERT books is not compulsory; thus, private schools can choose their materials. Comprehensive private books allow us to maintain our market position, and we do not foresee a significant dip in our business despite NCERT's efforts.

Question: What is the confidence level of the management on achieving the revenue guidance of INR800 crores?

Answer: We are quite confident about meeting our revenue targets based on our current data and interactions with our sales teams. We believe we will achieve the numbers we set for ourselves in this last quarter.

Question: Will there be a revision in the guidance due to the new classes adopting the NCF?

Answer: We have no plans to revise our guidance at this time. While we see positive trends from the new syllabus adoption, our guidance will remain set at INR800 crores. As for potential upside, we cannot predict specifics due to the seasonal nature of our business, but we will do our best.

Question: What will the consolidated debt level look like by the end of the financial year?

Answer: Currently, we are largely debt-free, with some capex and our recent acquisition affecting our balance. We expect to finish this financial year with a net cash of around INR120-150 crores, allowing us room for potential buyback discussions if opportunities arise.

Question: What structural levers drive the EBITDA margin guidance of 18% to 20%?

Answer: The EBITDA margin guidance is driven by an improved product mix, increasing content licensing revenues, and favorable realizations from the new curriculum books, which collectively enhance our profitability.

Question: Can the AI dataset licensing become 10% to 15% of our revenue over the next few years?

Answer: While it has the potential to grow to that level, we are focused on improving quality and expanding our dataset offerings, including videos and illustrations. This growth will take time but is expected to improve next year.

Question: What's the potential for TestCoach monetization?

Answer: TestCoach currently serves as a marketing channel, particularly for the CUET segment. We aim to build it slowly with confidence in our content quality and results, exploring monetization opportunities over the next several years as we grow our foothold in this area.

Question: What is the future growth trajectory after the NCF implementation?

Answer: Following the rollout of the NCF, we anticipate normalized growth levels of around 8% to 10%. Acquisitions or expansion into new segments could enhance this growth, but for the traditional publishing business, we expect a steadier growth rate.

Question: What growth can we expect historically following curriculum changes?

Answer: Historically, past curriculum changes led to significant growth in a relatively short timeframe. However, this transition has spread over a longer period now, so while substantial growth is expected in the coming couple of years, it will be more gradual compared to past experiences.