SCHAND - S Chand And Company Limited Share Price

In the Q1 FY26 earnings call, the management of S Chand and Company provided a cautious yet optimistic outlook. They reported consolidated revenues of Rs1,026 million, an EBITDA loss of Rs91 million, and a PAT loss of Rs141 million, primarily impacted by a shift in content licensing revenues from Q1 to Q2. Notably, the AI Datasets revenue dipped to Rs30 million from Rs115 million compared to the previous year.

Management emphasized a significant improvement in working capital metrics, achieving the lowest metrics in the company's history with:

• Receivable Days: 89 days (vs. 92 days in Q1FY25)
• Inventory Days: 218 days (vs. 261 days in Q1FY25)
• Net Working Capital Days: 119 days (vs. 132 days in Q1FY25)

They expect operating revenues to exceed Rs8,000 million for the full year and have upgraded their EBITDA margin guidance to 18%-20%, up from the previous 17%-19%. The focus on improving working capital and cash flows remains a priority, with net cash reserves increasing to Rs1,161 million as of June 2025, after a dividend payment of Rs141 million.

Management highlighted several upcoming opportunities:

1. The expected rollout of NCERT textbooks on the new syllabus for Classes 4, 5, 7, and 8 within FY26, with a full transition anticipated by FY27.
2. The launch of new online courses and a positive response to their product MyZen.
3. Continued engagement in M&A opportunities targeting small acquisitions that fill portfolio gaps, focusing on areas including Test Prep and International Boards, with an estimated size of under Rs50 million for targeted acquisitions.

Overall, the company is positioning itself to navigate short-term revenue fluctuations while preparing for long-term growth through strategic initiatives and product offerings.

1. Question: "What is the total CapEx outlay for FY 2026 and 2027?"
   Answer: Our CapEx is about Rs.35 crores to Rs.40 crores over the next two years. This isn't to build a new warehouse since our integrated warehouse is already leased; we are mainly focusing on setting up a new printing press next year, which will slightly increase CapEx.

2. Question: "Can you give some light on the NCERT updates? What's the timeline we can see for the other classes?"
   Answer: The NCERT syllabus for Classes 4, 5, 7, and 8 will be released this year. We anticipate that by FY27, the full adoption will be in place. The completion for all classes will take some time, and we are prepared to utilize this opportunity.

3. Question: "With the net working capital and receivables reducing, can it be improved or maintained?"
   Answer: Yes, we believe it is sustainable and we'll aim to further reduce inventory levels. We consistently seek improvements, and I am optimistic about achieving even better metrics.

4. Question: "How much efficiency gain is expected from the new CapEx?"
   Answer: We estimate a 15% to 20% improvement in production capacity, including enhanced efficiency and reduced costs, owing to the integration of new machines and better workflow.

5. Question: "What are the total number of employees currently?"
   Answer: We currently employ around 1,900, close to 2,000 individuals.

6. Question: "Can you elaborate on the revenue and EBITDA guidance for this year?"
   Answer: We expect operating revenues over Rs.8,000 million with an upgraded EBITDA margin guidance of 18%-20%, anticipating better gross margins due to lower paper prices and growth in digital data licensing.

7. Question: "What is the strategy for potential acquisitions?"
   Answer: We're exploring smaller acquisitions in areas where we have gaps, like Test Prep and international segments, with a focus on internal accruals for funding, estimating costs under Rs.50 crore for potential targets.

8. Question: "What is the trend of paper prices from the start of the year, and expectations moving forward?"
   Answer: Paper prices have declined by 5% to 7% and are currently stable. We expect prices to remain soft, influenced by external tariffs and market dynamics.

9. Question: "Is there a connection between CapEx and future revenue growth?"
   Answer: The CapEx primarily supports operational efficiency rather than directly tying to revenue growth. However, it positions us to take on new opportunities and meet future demand adequately.

10. Question: "Can you provide details on recurring revenue from your AI content?"
    Answer: There are some recurring revenues from term licensing with specific clients. As we move towards perpetual licensing, we're also repurposing existing content in different formats for additional revenue streams.