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Wednesday, April 26, 2017

S Chand & Company Limited IPO at a Glance




Issue Highlights

Issue Period
26/4/17-28/4/17
Price Band (Rs.)
660-670
Issue Size(shares)
1,05,00,848
Issue Size (Rs. crore) #
703.55
Issue Type
100% Book Built
Face Value (Rs.)
5
Listing
BSE, NSE
Industry
Educational Content
Registrar
Link Intime
Minimum Bid Quantity
22
Maximum Retail Subscription (Rs.)
1,91,620 ( 13 lots)
BRLM
JM Financial, Axis Capital, Credit Suisse
# derived figure

Issue Details


Offer for Sale:  Rs. 403.55 crore (60,23,236 equity shares)
Fresh Issue:   Rs. 300 crore (44,77,612 equity shares)
Equity Shares Outstanding Prior to the Issue:  2,98,44,496
Equity Shares Outstanding After the Issue #:  3,43,22,108

Objects of the Issue
(1)    Repayment of loans availed by the compamy and its one subsidiary: Rs. 152 crore
(2)    Repayment/prepayment of loans availed by the company and its subsidiaries VPHPL and NSHPL: Rs. 88 crore
(3)    General Corporate Purposes: NA

Industry Profile

The education sector is the key beneficiary of India’s economic growth and its favorable demographic profile and presently that same being 5 % of the GDP.
Indian K-12 education market is one of the largest globally with around 26 crore students. With growing middle class and rising thrust on education this market will grow further. The CBSE and ICSE schools are presently growing at an CAGR of around 21 %.
With the RTE (right to education) act, the emphasis on education is supposed to increase significantly.

Company Profile

S Chand limited is a leading Indian education content company in revenue terms delivering content and services through its 53 bonds viz: S Chand, Vikas, Madhubun, Sarasvati, Destination Success, Ignitor and more.
The company provides its service in three segments-early learning (pre-school), K-12 (Kindergarten to 12th standard) and higher education (college/university, technical education and tests like civil services etc.). The company has acquired 74 % of outstanding capital of Chhaya Prakashan, a couple of months ago and the same has helped the company with its expansion plans in East India.
As per company’s business strategy, it has started offering digital content (e-content) besides print content.
The company being a leading K-12 education company acquires around 72 % of the revenue from its K-12 business.
S Chand has a pan-India sales and distribution network and sales network consisting 4907 distributors and dealers.

Risks & Threats
1.       The bodies like CBSE keep on issuing circulars advising schools to use only NCERT print content, such moves can badly affect the top line of the company. Even courts have been seen passing judgments emphasizing schools to use NCERT books over their private counterparts.
2.       Seasonality of the business: The 4th quarter of an financial year (followed by the 1st quarter ) is the top grosser for the company
3.       The K-12 and higher education sector is being a regulated one restricts the desired revenue  growth
4.       The unregulated sector comprising early education, tests, vocational etc. offers tremendous competitions.
5.       Around 50 % of the revenue comes from titles of its top-twenty authors and one or more authors parting their ways would affect the top-line adversely




Financial Profile
Parameter
FY 16
PEG (Profit, trailing 4 years) #
1.47
Net Profit Margin (%)
8.63
Return on Capital Employed (%)
15.13
Return on Equity Sharp (%) #
6.77
ROE Smooth (%)
9.39
Total Liability to Net worth
.65
Price to Book Value #
3.34
Operating Cash to Net Profit
.8
TIE (Times Interest Earned)
3.46
AR collection Period (Days)
116.33
EV/EBITDA
18.48
M-Cap to Sales
3.7
Current Ratio
1.87
Profit CAGR (%)
33.48
Inventory Days
87.61
# using annualized data at the upper end of the price-band

Comparison with the listed Peers #
Parameters
PEG
NPM (%)
ROCE (%)
ROE (%)
EV/EBITDA
P/B
Inv Days
S Chand & co. Ltd.
1.47
8.63
15.13
9.39
18.48
3.34
87.61
Navneet Education Ltd.
5.76
13.01
17.41
17.72
9.45
6.76
117.74


# moneycontrol data




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