- 11 Nov 2022
- ICICIdirect Research
NAVNEET EDUCATION REPORTS DISMAL PERFORMANCE ON PROFITABILITY FRONT
NAVNETEDUL - 137 Change: 0.39 (0.28 %)News:
Navneet Education (NEL) reported a dismal performance on the profitability front with EBITDA margin declining by 401 bps YoY to 9.9% in Q2FY23. Though revenues grew 44% YoY to Rs 330 crore, however decline in EBITDA margin led to the company reporting a marginal 2% growth in EBITDA to Rs32.6 crore. Further higher interest and depreciation expense with lower other income and loss by associate companies (to the tune of Rs 10.2 crore) resulted in the company reporting a net loss of Rs 2.2 crore vs net profit of Rs 22.6 crore in Q2FY22.
View:
Q2FY23 revenue growth was driven by spill over of Q1FY23 publication segment as publication of some books was delayed in Q1FY23. Revenue from the publication segment grew 50% YoY to Rs 133 crore. However, the publication segment EBIT margin has declined from 23% in Q2FY22 to 6.2% in Q2FY23 which negatively impacted the overall profitability. Overall revenues for H1FY23 have still not crossed pre-Covid level and are trending ~ 98% of pre-Covid level. Though NEL has a strong balance sheet and a virtually debt free status, however improvement in the revenue growth momentum and margins will be the key monitorables going ahead.
Impact:
Negative