We recommended Navneet Education for the mark it has made in the educational publishing market over five decades of operations. It has garnered a market share of about 70 per cent in Gujarat and over 65 per cent in Maharashtra.
Navneet's publication business (around 60 per cent of top line) has compounded at an annual rate of 12.8 per cent between FY07 and FY14. According to ICICI Securities, syllabus changes in the next two academic years in the states of Gujarat and Maharashtra and Navneet's expansion to newer geographies should help publication revenues to grow at 14.2 per cent CAGR through FY17.
The balance of Navneet's revenues comes from the stationery segment, which has grown at 19.5 per cent between FY07 and FY14 (on a small base). Stationery revenues could grow at 14.3 per cent in the next two years, as per ICICI Securities estimates.
Over each of the last ten years, except one, Navneet has maintained a dividend payout of above 40 per cent. ROE in the last decade stood above 20 per cent, while operating margin averaged at 22 per cent. The stock still appears a conservative bet. Buy.
Gain of 100 per cent at market price of ₹106. Recommended in April 2013 at ₹53.