Navneet - Elara JUNE 2011 by icestar


									                          India | Education                                                                                                                                                                                   14 June 2011
                          Initiating Coverage                                                                

                          Navneet Publications
                          An investment for long                                                                                    Rating : Buy
                          A unique business model and opportunity                                                                   Target Price : INR84
                                                                                                                                    Upside : 29%
                          Navneet is entrenched in the business of education for five decades;
                                                                                                                                    CMP : INR65 (as on 13 June 2011)
                          the company has few listed peers and challengers. It has business
Global Markets Research

                          leadership in Maharashtra and Gujarat with access to 20,000 schools.                                      Key data*
                          A business/franchise that has been painstakingly built has steady
                                                                                                                                    Bloomberg /Reuters Code                                                                     NPI IN/NAVN.BO
                          growth, low volatility and addresses a large opportunity. Its foray into                                  Current /Dil. Shares O/S (mn)                                                                       238/238
                          newer states and the impending syllabus change are key growth                                             Mkt Cap (INRbn/US$mn)                                                                                16/348
                          opportunities.                                                                                            Daily Vol. (3M NSE Avg.)                                                                            387,743
                                                                                                                                    Face Value (INR)                                                                                          2
                          Poised for an accelerated growth in revenue
                                                                                                                                    1 US$= INR44.7
                          Navneet Publication caters to the education sector, operating in three                                    Source: Bloomberg ; * As on 13 June 2011
                          major segments, viz., publishing, stationery and the recently launched
                          e-learning business. The company’s mainstay publication division                                          Price & Volume
                          operates at over 30%-32% EBITDA margin and holds a dominant 60%                                                   80                                                                                                              8,000
                          market share of the total Maharashtra and Gujarat markets of INR5bn.
                                                                                                                                            70                                                                                                              6,000
                          With syllabus change taking effect in Maharashtra and Gujarat, new
                                                                                                                                            60                                                                                                              4,000
                          geographies being explored in the publishing division, Navneet is on
                          course to clock revenue growth of 19% CAGR over FY11-13E.                                                         50                                                                                                              2,000

                          Margins on upward swing led by improvement all segments                                                           40                                                                                                              0

                          Going forward, Navneet’s focus on e-learning, improvement in                                                       Jun-10                           Oct-10                           Feb-11                         Jun-11
                                                                                                                                                                Vol. in 000's (RHS)                                                  Navneet (LHS)
                          publication business and optimum product mix in stationery segment
                                                                                                                                    Source: Bloomberg
                          will improve its EBITDA margin by about 250bps over FY11-13E. The
                          company reported EBIDTA margin of 22.3% in FY11 and we expect                                             Share holding(%)                                            Q1FY11 Q2FY11 Q3FY11 Q4FY11

                          EBIDTA margin to be 24% and 24.8% in FY2012E and FY2013E                                                  Promoter                                                          61.8                  61.8                61.8                61.8
                                                                                                                                    Institutional Investors                                           10.0                  10.2                  9.4                    9.5
                                                                                                                                    Other Investors                                                       7.2                7.4                  8.0                    7.2
                          E-learning to be future growth engine                                                                     General Public                                                    21.0                  20.6                20.8                21.5

                          The e-learning teaching module for K-12 segment is gaining traction                                       Source: BSE

                          with about 467 schools as of FY11. Navneet plans to ramp it to about                                      Price performance (%)                                                               3M                     6M                   12M
                          1,200 schools by FY12E. We expect the cumulative revenue from e-                                          Sensex                                                                          (0.5)                     (4.5)                 10.4
                          learning over next two years to be INR400mn; with over 32,000                                             Navneet Publication                                                              18.3                     21.0                  39.5
                          private schools, the scope of market is about INR6.4bn.                                                   Source: Bloomberg

                              At CMP, Navneet trades at a P/E of 15.8x and 12.6x of FY12E and                                                                                Price performance
                              FY13E earnings respectively. The company’s stronghold in the                                                 180
                                                                                                                        (Rebased to 100)

                              Maharashtra and Gujarat provides low earnings volatility. The                                                160
                              syllabus changes in both the regions, venturing in new geographies                                           140
                              and foray into e-learning area provide large-scale earnings                                                  120

                              potential. We assign a 16x multiple on FY13E EPS of INR5.2,                                                  100
                              deriving a target price of INR84 per share. We initiate coverage with


                              a Buy rating and an upside of 29% from the CMP of INR65.
                                                                                                                                                                              Navneet                                           Sensex
                                                                                                                       Source: Bloomberg 

                              Key Financials Consolidated
                              Y/E Mar (INR mn)           Rev     YoY (%)    EBITDA EBITDA (%)    Rep PAT   YoY (%) Fully DEPS                             RoE (%)                RoCE (%)                          P/E (x) EV/EBITDA (x)
                              FY09                     5,153        25.3     1,024        19.9       566         4.5                       2.4                 21.9                         26.8                        27.5                                    14.6
                              FY10                     5,316         3.2     1,069        20.1       634        11.8                       2.7                 21.5                         25.6                        24.2                                    14.0
                              FY11                     5,539         4.2     1,236        22.3       756        19.3                       3.2                 22.1                         27.0                        20.5                                    12.1
                              FY12E                    6,539        18.0     1,570        24.0       978        29.4                       4.1                 24.1                         29.9                        15.8                                     9.5
                              FY13E                    7,874        20.4     1,949        24.8     1,228        25.5                       5.2                 25.3                         32.4                        12.6                                     7.7
                              Source: Company, Elara Securities Estimate 
                                                                                     Aliasgar Shakir • • +91 22 4062 6816
                                                                                                                                                     Elara Securities (India) Private Limited
    Navneet Publications

    Valuation trigger                                                                                                                                                                                Investment summary

                                                                                                                                              P/E rerated will occur as                                   Syllabus change in Maharashtra and
                                                                                                                                                   earnings gets
                                                                                 Steep volume growth
                                                                                   in FY12 and FY13.                                                appreciated                                           Gujarat in FY12E and FY13E will
                                                                                                                                                                                                          extinguish secondhand book market
                                                                                                                                                                                         2                and propel volume growth over the
                                                                                                                                                                                                          next two years.

         60                                                                                                                                                                                               New territories will increase the target
                                                                                                                                                                                                          market    and    enhance       scalability

         30                                                                                                                                                                                               E-learning     offers   huge    growth
         20                                                                                                                                                                                               potential    and      Navneet’s  strong
                                                                                                                                                                                                          network in existing markets should















                                                                                                                                                                                                          play a pivotal role.

    Source: Bloomberg, Elara Securities Estimates                                                                                                                                                     
                                                                                                                                                                                                     Valuation trigger
    Valuation overview                                                                                                                                                                               1.   Steep volume growth in FY12 and
    Valuation                                                                                                                                                             FY 2013E                        FY13.

    Net Profits (INR mn)                                                                                                                                                      1,228.2                2. P/E rerated will occur as earnings gets
    Diluted no of shares (mn)                                                                                                                                                     238.2
    EPS (INR)                                                                                                                                                                           5.2           
                                                                                                                                                                                                     Key risks
    Target Multiple (x)                                                                                                                                                                16.0
                                                                                                                                                                                                          Slow penetration in new territories
    Fair Value per share (A)                                                                                                                                                              84
    CMP (INR)                                                                                                                                                                          65.0               Limited acceptance        of E-learning
    Upside (%)                                                                                                                                                                           29               concept in schools
    Source: Elara Securities Estimates                                                                                                                                                                    High competition from unorganized
                                                                                                                                                                                                          stationery players.
    Valuation driver - P/E band
                     100                                                                                                                                                                             Our assumptions
                      90                                                                                                                                                      20x
                                                                                                                                                                                                          We expect publishing segment to
                      70                                                                                                                                                      15x                         witness 12% volume CAGR and 6%
                      60                                                                                                                                                      12x                         realization CAGR over FY11-12.

                      40                                                                                                                                                                                  We expect stationery segment to
                                                                                                                                                                                                          witness 12% volume CAGR and 6%
                      10                                                                                                                                                                                  realization CAGR over FY11-12.
                                                                                                                                                                                                          E-learning to break even in FY12E.








    Source: Elara Securities Research


2                                                                                                                                                                                                          Elara Securities (India) Private Limited
                                                                                                        Navneet Publications

Consolidated Financials (Y/E Mar)
Income Statement (INR mn)                     FY10      FY11    FY12E    FY13E    Revenue & margins growth trend
Net Revenues                                  5,316    5,539    6,539    7,874               8,000                                                    28
EBITDA                                        1,069    1,236    1,570    1,949
                                                                                                                                        24.8          26
Less :- Depreciation & Amortization             128      114      138      143               7,000                            24.0

                                                                                  (INR mn)
EBIT                                            941    1,122    1,432    1,806                                        22.3                            24

Less:- Interest exp                              21       29       28       27                                                                        22
Non operating inc/(exp)                          64       68       68       68               5,000
PBT                                            984     1,160    1,471    1,847
Less :- Taxes                                  351       404      493      619               4,000                                                    18

PAT                                            634       756      978    1,228                          FY10          FY11   FY12E     FY13E
                                                                                                Net Revenues (LHS)              EBITDA Margin (RHS)
Adjusted PAT                                   639       756      978    1,228
Balance Sheet (INR mn)                        FY10     FY11E    FY12E    FY13E    Source: Company, Elara Securities Estimates

Share Capital                                   476      476      476      476
Reserves                                      2,463    2,941    3,576    4,373
Warrants                                           -        -        -        -   Adjusted profits growth trend
Borrowings                                      733      733      733      733
                                                                                             1,400                                                    35
Total Liabilities                             3,673    4,150    4,785    5,582                                               29.4
Gross Block                                   1,989    2,076    2,166    2,246               1,200                                      25.5          30

                                                                                  (INR mn)
Less:- Accumulated Depreciation               1,099    1,213    1,351    1,494               1,000                                                    25

Net Block                                       891      863      815      752                800                                                     20
Add:- Capital work in progress                   55       55       55       55
                                                                                              600       11.8                                          15
Investments                                       2        2        2        2
Net Working Capital                           2,725    3,230    3,912    4,773                400                                                     10

 Miscellaneous                                     -        -        -        -                         FY10         FY11    FY12E     FY13E
Total Assets                                  3,673    4,150    4,785    5,582                   Adjusted PAT (LHS)                  PAT Growth (RHS)

Cash Flow Statement (INR mn)                  FY10     FY11E    FY12E    FY13E    Source: Company, Elara Securities Estimates
Cash profit adjusted for non cash items       1,080    1,304    1,638    2,017
Add/Less : Working Capital Changes              (33)   (169)    (298)    (433)     
Operating Cash Flow                             719      731      847      965    Return ratios
Less:- Capex                                   (92)     (87)     (90)     (80)        35                                                       32.4
Free Cash Flow                                  627      644      757      885                                                 29.9
Financing Cash Flow                           (594)    (308)    (372)    (458)        30                             27.0
Investing Cash Flow                            (95)     (87)     (90)     (80)
Net change in Cash                               30      336      385      427
Ratio Analysis                                FY10     FY11E    FY12E    FY13E        20
                                                                                                     21.5            22.1
Income Statement Ratios (%)
Revenue Growth                                  3.2      4.2     18.0     20.4        15

EBITDA Growth                                   4.3     15.6     27.0     24.2                       FY10           FY11      FY12E        FY13E

PAT Growth                                     11.8     19.3     29.4     25.5                                     ROE (%)           ROCE (%)

EBITDA Margin                                  20.1     22.3     24.0     24.8    Source: Company, Elara Securities Estimates
Net Margin                                     11.9     13.6     15.0     15.6
Return & Liquidity Ratios                                                          
Net Debt/Equity (x)                             0.2      0.2      0.2      0.1     
                                                                                                       Syllabus change to propel growth
ROE (%)                                        21.5     22.1     24.1     25.3
ROCE (%)                                       25.6     27.0     29.9     32.4
Per Share data & Valuation Ratios
Diluted EPS (INR/Share)                         2.7      3.2      4.1      5.2
                                                                                                        Consistently high return ratios
EPS Growth (%)                                  NA      18.2     29.4     25.5
DPS (INR/Share)                                 1.0      1.0      1.2      1.5
P/E Ratio (x)                                  24.2     20.5     15.8     12.6
EV/EBITDA (x)                                  14.0     12.1      9.5      7.7
EV/Sales (x)                                    2.8      2.7      2.3      1.9
Price/Book (x)                                  5.3      4.5      3.8      3.2
Dividend Yield (%)                              1.5      1.5      1.9      2.4
Source: Company, Elara Securities Estimates

Elara Securities (India) Private Limited                                                                                                                           3
    Navneet Publications 
    Navneet Publications

    Investment Rationale
               Poised for accelerated revenue growth
               Margins on upswing led by focus on publishing biz and rejig in stationery
               E-learning to be future growth engine

    Poised for accelerated revenue                                          Publishing – Major growth driver
    growth                                                                  Navneet has a strong foothold in publication built over
                                                                            five decades. About 56% of revenues are derived from
    Focusing on publishing biz                                              curriculum based publication which includes products
    Navneet Publication caters to the education sector,                     like Workbook, Guides and 21 Question Set to K-12
    operating in three major segments, viz., publishing,                    segment in Maharashtra and Gujarat. Maharashtra
    stationery and the recently launched e-learning business.               contributes 60% revenues, while Gujarat generates 40%.
    The company’s mainstay publication division operates at                 In K-12 region, the primary section (1st-4th) contributes
    over 30%-32% EBITDA margin and holds dominant 60%                       about 24% revenues; while the secondary section (5th-
    market share of the Maharashtra and Gujarat markets of                  7th) generates21% of revenues each. The higher
    INR5bn. The company has sustained leadership position                   secondary (8th-10th) contributes 36% of revenues. The
    for over 10 years in the vastly fragmented market and                   junior college level (11th-12th) accounts for the
    remains a strong player                                                 balance11% of revenues.

    Over the last 5-6 years, Navneet’s topline has grown at                 Exhibit 2: K-12 Standard-wise revenue contribution
    14% CAGR. The company’s strong brand, wide                                           11th-12th
    distribution network, value addition and cost efficiency                               11%
    have been major growth drivers.                                                                                      1st-4th
    We expect the company to maintain growth trajectory
    given the opportunities. Change in syllabus in Gujarat
    and Maharashtra over the next two years, expanding
    publishing business in newer states, scope in e-learning
                                                                                    8-10th                               5th-7th
    segment - all offer large-scale scalability proposition in                       36%                                  21%
    the publishing segment. The stationery segment with
    over 500 stock keeping units (SKUs) is also introducing
    new product lines which will enhance product profile
    and provide higher revenue stream.                                      Source: Company

    We expect revenue growth to sustain at 19% CAGR over                    Exhibit 3: Navneet’s Product portfolio
    FY11-13E, translating into revenues of INR6.5bn and                                       Workbooks
    INR7.9bn in FY12E and FY13E respectively.

    Exhibit 1: Publishing remain key contributor                                                                             21
               9,000                                                                                                       Question
               8,000                                                                                                        15%
    (INR mn)

                   0                                                        Source: Company

                        FY09       FY10        FY11      FY12E   FY13E      The segment has historically clocked a volume CAGR of
                   Publication Sales      Stationery Sales   Others Sales   11% reaping a healthy 30%-32% EBITDA margin.
                                                                            Navneet has over 60% market share of the overall
    Source: Company, Elara Securities Estimates
                                                                            industry size of INR5bn in Maharashtra and Gujarat,
                                                                            while the remaining market is fragmented with smaller
4                                                                                                Elara Securities (India) Private Limited
                                                                                                                                                                  Navneet Publications

Exhibit 4: Syllabus change to improve publishing                                                                               Conducive demographics
                                                                                                                               Exhibit 7: India has the largest "school aged" popln
                        180                                                                               30
(Pack/PCS in Million)

                        150                                                                               28

                        120                                                                                                                300

                                                                                                                                 (In mn)
                         60                                                                                                                200

                         30                                                                               22
                          0                                                                               20
                              FY08 FY09 FY10                              FY11       FY12E FY13E                                             0
                              Sales Volume (LHS)                                    Realisation rates (RHS)
                                                                                                                                                 India    China          US         UK          Brazil      Russia

Source: Company, Elara Securities Estimates                                                                                                                        2008           2015

K-12 industry                                                                                                                  Source: US census international database

Exhibit 5: K-12 segment caters majority of the                                                                                 K-12 or Kindergarten to 12th Std refers to schooling for
education                                                                                                                      students between 3-17 years, including nursery, primary,
                                                                                                                               secondary and higher secondary. Despite the largest K-
                                                         36%                            no formal                              12 population globally, India has a very low enrollment
                           Post                                                          school
                         Graduate                                                                                              rate at the school level, falling from 84% at primary level
                            1%                                                                                                 to 57% at the middle school level to 32% in secondary
                               Graduate                                                    schools                             and higher secondary levels.
                                  4%                                                       upto 4th
                            Some                                                             8%
                                                                                                                               Low enrollment rate and high drop outs are caused by
                         college not
                          graduate                                                                                             low availability of schooling in rural areas, low
                                                                                        schools -
                                                                                                                               awareness, as well as prevalence of child labour in the
                                   SSC/HSC                                             5th to 9th                              lower economic strata.
                                     15%                                                  33%
                                                                                                                               Exhibit 8: K-12 segment – Largest share in education
Source: Industry Research                                                                                                      segment
The estimated books market in India is USD1.75bn.                                                                                    1,000
(INR78.7) Private publishers have access to just 60%
(USD1bn i.e. INR45bn) of the market given the                                                                                              750
                                                                                                                               (INR bn)

monopoly of state boards and NCERT in school text                                                                                          500
books market – i.e. 40% of the total books market.
Navneet caters to the Maharashtra and Gujarat markets.
The size of these two geographies together is about                                                                                          0
INR5bn - nearly 11% of overall market. Out of this,



                                                                                                                                                                          (Classes 5-
                                                                                                                                                            l Colleges


Navneet has a market share of about 60%. The


remaining is shared by unlisted peers like Chetna
Jeevandeep, and other fragmented players catering to
the K-12 region.                                                                                                               Source: Industry Research

Exhibit 6: Value addition for a INR100 book                                                                                    Private spending in K-12 segment is largest in the
                        100                                                                   Retailer                         education sector, with a size of INR785bn. Navneet’s
                                                                                              profit                           presence in this segment allows it to cater to largest
                                                                                              Distributor                      share of the education pie. The K-12 segment has been
                         60                                                                   profit
                                                                                                                               growing at ~14% over the long term.

                         40                                                                   Publisher
                                                                                              profit                           Lower penetration, growing private schools offer
                                                                                              Operating                        high prospects
                          0                                                                   costs
                                                                                                                               Private schools account for only 7%-8% of total schools,


                                                                                              Materials                        but they provide education to over 40% of total students.
                                                                                              Authors                          Failure of public schools to provide quality education,
                                                                                                                               growing awareness of education among middle class
Source: Company, Industry research                                                                                             has led to the migration from public to private schools.
Elara Securities (India) Private Limited                                                                                                                                                                                 5
    Navneet Publications

    Exhibit 9: Market composition                                                                     According to NCERT, National Council of Education
                                                                                                      Research and Training), India requires 20,000-25,000
           Total number of                   Not enrolled,                 Enrolled,                  quality schools. The quantity and quality gap in K-12 has
        eligible K-12 students                   61%                         39%
           in India (341 Mn)                                                                          led to huge untapped potential. This augurs well for the
                                                                                                      education sector on the whole. Higher enrollments and
                Type of school                                                      Private,
                   (~ 1 Mn)                               93%                         7%              rising number of private schools will propel growth
                                                                                                      across the education industry including the book
                Private schools        Private aided,   Private unaided    Private unaided
                    by type                 41%         premium, 20%       Standard, 39%              market/publishing sector.
                  (~ 75,000)
                                                                                                      99% schools in India are governed by the State Board,
                                  0          20         40           60        80        100
                                                                                                      while the CBSE, ICSE, IGCSE and IB all put together
    Source: Industry research                                                                         account for the balance 1%. Thus a larger proportion of
    Exhibit 10: Increasing proportion of private unaided                                              the school going age group can be covered if the
    schools                                                                                           business is state board focused. This allows Navneet to
                                                                                                      concentrate on a broader market, thus increasing the
                                      Max Growth                                                      scope for growth.
                                  78                                      13                          Inherent entry barriers
           80                                                              7
                                                                                                           Strong network and brand – key to market share

                                  85                                                                  The company has established strong distribution channel
           40                                                             80
                                                                                                      with the state board schools in Gujarat and Maharashtra
                                                                                                      which ensures brand presence and sales volumes.
            0                                                                                         Navneet covers nearly 150,000 schools through the
                          1993-94                                     2004-05                         direct marketing network. It touches nearly 300
                  Government      Private aided                       Private unaided                 canvasses with a base of about 20,000 private schools
    Source: Industry research                                                                         out of a total of 30,000 private schools in Gujarat and
                                                                                                      Maharashtra. Its products are sold under the 'Navneet',
    There has been significant increase in schooling capacity,
                                                                                                      'Vikas', 'Gala', ‘FfUuNn', ‘Boss' and ‘NavneetNxt' brand
    with the largest contribution coming from private
                                                                                                      names.This allows the company to ensure product recall
    unaided institutes, resulting in easier access to education
                                                                                                      and become the preferred choice among students, thus
    with an eye on quality.
                                                                                                      sustaining market share and earnings.

    Exhibit 11: State board holds majority

                                                                                                               Boards in India 

                State Council for                                  Central Board of            Indian Certificate of        International          International
            Educational Research and                                 Secondary                      Secondary             General Certificate       Baccaculate
                    Training                                         Education                      Education               of Secondary                (IB) 
                     (SCERT)                                            (CBSE)                        (ICSE)                  Education

                  Governed by:                                     Governed by:                  Governed by:              Governed by:           Governed by:
             Respective State Boards                                GOI / MHRD                   Council of the              Cambridge             International
             No. of Schools: 1280000                               No. of Schools:               Indian School             International            Baccaculate
                                                                       10597                       Certificate              Examination           No. of Schools:
                                                                                                 No. of Schools:         No. of Schools: 230            65 

           99% schools in India are
           governed by the State                              1% schools are governed by the CBSE, ICSE, IGCSE and IB all put together 

    Source: Company
6                                                                                                                            Elara Securities (India) Private Limited
                                                                                       Navneet Publications

       Content Creation                                        typically, a three year phenomena, where parts of the
                                                               entire subject/curriculum are revised in yearly phases.
Navneet has a team of about 185 authors that create
content and update it on timely basis. This is increased       During the syllabus revision period, the industry grows
by about 5 authors every year. Content creation remains        about 15%, since the secondhand book market is
key hurdle in the business and offers significant entry        demolished and old books become irrelevant. Thus the
barriers. Even for Navneet, despite the strong team of         book buyers have to resort to only new books.
authors, it takes over two years to enter a new
                                                               This does not increase the content creation cost or
geography and even longer to grow market share as
                                                               impact the profit margins of the publishers. Authors are
content creation and setting up distribution channels are
                                                               paid royalty as a percentage of book sales. So the
major hurdles.
                                                               content cost increase remains linear to the growth of
Author reimbursements are on revenue sharing basis,            business growth.

ranging between 2%-4% of sales. This derisks the
                                                               The next 2-3 years would witness a strong growth in
company from lower sales of products which may have
                                                               sales, due to the effect of syllabus change. We expect
fixed fee payments leading to margin compression.
                                                               volumes CAGR of 12% over FY11-13E and realization
Moreover, for authors it generates better returns as
                                                               rates increase of 6%. Operating at an EBITDA margin of
Navneet has 60% market share. Consequently author
                                                               over 30%, higher than the overall margin of 23-24%, the
attrition rate is lower.
                                                               growth in publishing is highly value accretive.
Growth opportunity lies ahead                                  Venturing in new territories
Syllabus change in Maharashtra and Gujarat to                  The company is venturing in new territories like
propel volumes                                                 Karnataka and CBSE belonging northern regions. The
The curriculum is expected to be revised in FY12E and          company’s strategy is to focus in English speaking high
FY13E across all subjects/standards which will translate       growth markets with limited competition and high
into a healthy 15% growth volume growth. Maharashtra           synergies in content creation with existing markets. This
State board has already announced the change in                will enable Navneet to increase overall target market.
syllabus, while Gujarat is yet to make an announcement.        Since the company has content base for Maharashtra
The company has received indication of the following:          and Gujarat, this will enable it to create content for new
                                                               markets quickly.
Exhibit 12: Proposed syllabus change in Maharashtra
Year              Standards                 Syllabus           The company has started testing the market and creating
                     IX              Science/Maths I&II        content and plans to start full title publishing by FY13-
2010-11                                                        14E. Navneet does not have to incur any significant
                     XII            Science/Commerce
                                                               capex to tap these markets, as authors are paid royalties
                     X               Science/Maths I&II
2011-12                                                        as a percentage of sales. The key entry barrier in new
                     XI                     Science
                                                               geographies is acceptance of the publisher’s content.
                     XII                    Science
                                                               This is Navneet’s key strength in Maharashtra and
2012-13                         History & Civics, Geography,
                   IX & X                                      Gujarat. Thus, even in new territories, the company is
                                 Economics, Environment
                                                               presently, building its network with the schools.
Source: Company

Typically, on an average after every five years, the state     Growing scale
boards revise the syllabus of the K-12 standards. This is      Management believes, it will take a couple of years to
done to upgrade the study material as per the                  find any meaningful traction in the new territories. The
requirements. In the period of no syllabus change, the         company can also tap its network of 80,000 book stores
industry grows at a high single digit rate of about 7%-        across the country to ensure product reach to
9%. This is led by growing enrollment rates, improving         consumers. Management has a target to generate about
literacy rates and increasing number of private schools        INR1bn over the next 4-5 years thus contributing about
which have a superior standard of education which adds         30% of the current publication sales.
to the volumes. However, this is lower than the actual
                                                               The company has a cash rich position of over INR1bn net
book demand due the existence of secondhand book
                                                               cash and is eyeing possible acquisition targets, which
market. Many retailers and distributors buy old books
                                                               would allow it to gain market share in lesser time period.
after the end of academic years and sell them at half the
                                                               We have not factored any earnings from the new
actual rates. This tapers the growth of new books and
                                                               geographies or acquisition; however, we believe
thus hampers the sales volume. The syllabus change is
                                                               Navneet’s proven capabilities in current geographies,
                                                               and cash rich position and a deep distribution channel
Elara Securities (India) Private Limited                                                                                      7
    Navneet Publications

    places it in a strong position to penetrate in other         The overall organized market is outpacing the
    markets.                                                     unorganized market growing at about 15%. With the
                                                                 introduction of new SKUs, Navneet aims to grow at
    Non Curriculum to provide further impetus
                                                                 about 20%, selling premium products that generate
    This segment contributes 9% of the revenue under             higher margins. We have factored a 12% volume CAGR
    publication division. The government has been                in the stationery segment over FY11-13E, with increase
    promoting various non curriculum based books on              in average realization of 6%. The segment is expected to
    various social and cultural aspects such as women            maintain healthy 18% CAGR over FY11-13E.
    empowerment, children books and others. The company
    is expecting to contribute about 10%-15% of revenues         Paper Stationery
    from this space over the next two years with orders of       Navneet manufactures stationery materials and has a
    nearly INR500mn. This will further boost the earnings,       strong hold in products like Tight-Bind™ Notebooks,
    with healthy margins upwards of 30%.                         Long Books, and Drawing Books. The overall size of the
                                                                 market is INR60bn. It witnessed a growth of over 15%.
    Stationery to focus on high yielding                         Navneet plans to initiate an aggressive marketing plan
    segments                                                     and introduce new products to sustain market standing.
    Navneet offers paper as well as the non paper stationery.    Non-Paper Stationery
    The paper and non paper stationery market size together
                                                                 Under this segment, Navneet sells pencils, markers, color
    stands at INR100bn with over 80% of the share with
                                                                 pencils, sharpeners, erasers etc. The overall market size is
    unorganized players. With more than 500 SKUs, Navneet
                                                                 ~ INR40bn and is expected to grow at about 10% in
    is one of the largest stationery brands in India and has
                                                                 coming years. The company plans to increase product
    aggressive growth plans in the segment.
                                                                 range by adding highlighters etc as well as vying with
    Exhibit 13: Stationery market size in India (INR bn)         unorganized players for the pie.

          Non paper
                                                                 E-learning to be future growth
              40                                                 engine
                                                                 Given the strong relationship with schools across the
                                                                 two states, Navneet has expanded the product portfolio
                                                                 in its content business by creating a digitised version of
                                               stationary        the textbook based on the state level curriculum. Given
                                                   60            the skewed student-teacher ratio, and shortage of
                                                                 average annual instructional days in a year, e-learning
                                                                 initiative has a lot of potential to enhance the learning
    Source: Industry sources                                     experience.
    The business operates on a low margin with competition       Exhibit 14: Growth in e-learning business
    from large unorganized segment. The stationery
    segment garners EBITDA margin of about 13% catering
    to about 80,000 retail stores across the country and            1,200
    about 40,000 in its mainstay territories of Maharashtra
    and Gujarat.                                                      900

    Industry shifting from organized to unorganized                   600

    Currently the stationery market is witnessing a shift away        300
    from the unorganized segment to organized players on
    the back of growing quality requirements of customers,
                                                                                    FY10              FY11E             FY12E
    and volatile supplies by unorganized players. Many
                                                                                                No of schools tied up
    unorganized players operate at low margins and hence
    have high commodity price risk. This impacts the regular     Source: Company, Elara Securities Estimates

    supplies of dealers/retailers and thus they are graduating
    to stocking superior quality products by organized

8                                                                                          Elara Securities (India) Private Limited
                                                                                                     Navneet Publications

Significant ramp up in school tie ups                                     Huge scope of growth
The company ventured in the e-learning business in                        There are around 138,000 schools across Gujarat and
Maharashtra and Gujarat in FY10 and has witnessed                         Maharashtra, out of which nearly 32,000 are private
significant interest. In FY10 the number of schools tied                  schools which remain the key targets. If the company
up was 250. As of FY11, Navneet had already installed                     can generate revenues of INR2,00,000 per school the
the classroom teaching module in about 467 schools for                    potential market on e-learning through 32,000 private
the entire K-12 segment, and plans to ramp up to about                    schools can be INR 6.4bn.
1,200 schools by FY12E. This is above its earlier target of
                                                                          Navneet has an ambitious target to touch about 5,000
1,000 schools by FY12E. In terms of classrooms, as of
                                                                          schools by FY15E. This is 25% of the current relationships
FY11 1,800 classrooms are using the product and
                                                                          in its publishing segment. The company clocked
management aims to reach 5,000 classrooms for FY12E.
                                                                          revenues of about INR45mn in FY11 and targets about
Thus the company expects an increase in the number of

                                                                          INR150mn in FY12E and about INR250mn in FY13E.
classrooms per school from 3.9 to 4.2.
                                                                          With INR50 price per student per month and an
Established network places Navneet                                        expectation of 5,000 schools using the product for the
better among peers                                                        entire K-12 section, the segment has the potential to
Navneet’s key strength in the Maharashtra and Gujarat                     garner ~INR1bn revenues by FY15E contributing nearly
regions lies in its strong network base already established               20% of revenues. We believe, Navneet’s significant
with over 20,000 private schools from an overall 32,000                   presence in the education sector, strong brand and
private schools. Navneet content is already accepted by                   nascent stage of the industry provide large-scale
the Maharashtra and Gujarat education system holding                      opportunity for growth.
60% market shares in the K-12 publication business.                       The business operates on a fixed cost model. Navneet’s
Exhibit 15: Revenues from E-learning                                      overall cost for the segment is INR5.5mn per month i.e
                                                                          about 66mn annually. The company has appointed a
            300                                                           team of animators that constantly upgrade the product
            250                                                           and innovate better technologies. Navneet has an
            200                                                           established network of schools and thus there is no
 (INR mn)

                                                                          incremental cost. Further, the company does not plan to
                                                                          sell through the retail model as the product needs to find
                                                                          acceptance at school level at the initial stage. This will
             50                                                           keep a tight lid on the advertisement cost.
                                                                          We have assumed a cost escalation of 25% in FY12E and
                          FY11E              FY12E            FY13E
                                      Sales from e-learning               20% in FY13E on conservative basis. This should allow
                                                                          the business to breakeven in FY12E and start adding in
Source: Company, Elara Securities Estimates
                                                                          the bottom line. Operating on fixed cost leverage, the

Exhibit 16: E-learning scope of growth
            Particulars                                                FY10      FY11E      FY12E        FY13E      FY15E      Scope
(a) No of schools                                                       250        467       1,200        2500      5,000     32,000
(b) No class classrooms                                                 600      1,800       5,000      10,000     40,000
(c ) Classroom per school                                                2.4       3.9         4.2          4.0        8.0
(d) Cost per student per month (INR)                                     50         50         50           50         50
(e) students in each class                                               50         50         50           50         50
(f)         no of months                                                 10         10         10           10         10
(g) Revenue per school (c x d x e x f) (INR)                          60,000    96,360    1,04,167     1,00,000   2,00,000   2,00,000
(h) Total revenues from E-learning (b x d x e x f) (INR mn)              15         45        125          250      1,000      6,400
(i)         Fixed cost per month (INRmn)                                           5.5         6.9          8.3        9.9
(j)         Growth (%)                                                                         25           20         20
(k)         no of months                                                            12         12           12         12
(l)         Total fixed cost (gxh) (i x k) (INRmn)                                  66         83           99        119
(m) Operating profit (h-l) (INRmn)                                                 (21)        43          151        881
(n) No of shares (mn)                                                  238.2     238.2       238.2       238.2      238.2
(o) Per share profit (pre-tax) (INR)                                              (0.1)        0.2          0.6        3.7
Source: Company, Elara Securities Estimates
Elara Securities (India) Private Limited                                                                                                  9
     Navneet Publications

     segments can garner over 50% EBITDA margin, which          Exhibit 17: Margin to remain upbeat
     could be a bigger opportunity than the publishing                     8,000                                                26
                                                                           7,000                                                24
     Regional business presents limited

                                                                (INR mn)

                                                                           6,000                                                22
     The company’s e-learning product is curriculum based
     instead of the concept based e-learning modules                       5,000                                                20
     innovated by peers like Educomp. This allows teachers to
     use the animated content of text book to explain                      4,000                                                18
     concepts better and yet remain on track with the                                 FY09    FY10     FY11    FY12E FY13E
     syllabus.                                                                     Net Revenue (LHS)          EBITDA Margin (RHS)

     Educomp, the biggest player in the E-learning business     Source: Company, Elara Securities Estimates

     only caters to CBSE board, and thus does not compete       Right product mix will improve
     directly with Navneet. Sundaram, a major player in
     stationary business is also offering e-learning product
     thus a direct peer with presence in Maharashtra.           Publishing to hold the majority
     However, Sundaram is more focused on the retail            The publishing segment remains the key for Navneet
     channel and has limited direct presence in schools.        offering greater revenue visibility, and higher EBITDA
     Further we believe holding about 60% market share in       margins. The publishing segment generates EBITDA
     the publication business; Navneet’s content is accepted    margin of over 30% and the company’s focus on this
     by the schools and students and thus, will remain a        segment is evident from its dominance in the revenue
     stronger player in the market.                             mix. Contribution of publishing segment has been
     Navneet charges about INR50 per student per month          consistently over 50% of total sales. The company is
     with an agreement to use the product for about 3-5         focused to grow the publishing business significantly.
     years. Peers like Educomp charge about INR125 per          We expect the publishing vertical’s contribution to
     student, while Sundaram charges INR150. Sundaram’s         remain steadily above 50% led by syllabus changes and
     smart class charges about INR7,000 through its retail      expansion in new geographies.
     channel. Thus with a strong market share and higher        Rejig in stationery product profile to lift margins
     brand presence, Navneet’s product is also placed below
                                                                In the stationery segment, management has indicated
     peer prices.
                                                                the company would rejig its product profile, focus on
                                                                premium products and introduce new SKUs to enhance
     Margins on upswing                                         EBITDA margin from 13% at present to about 15%
     Operating in a stable sector, Navneet’s margins have       FY13E.
     steadily grown upwards. It improved its EBITDA margin
                                                                Operating leverage in E-learning to aid margin
     from 19.9% to about 22.3% over FY06-11. Its focus on
     the margin accretive publishing business, optimum
     product mix, and limited raw material risk allows the      The company’s high operating leverage from E-learning
     company to enhance margins consistently. Going             business will also provide impetus to margin expansion.
     forward, Navneet’s focus on the publishing segment,        Though the size of the segment in FY13E will be little
     and right product mix in the stationery segment will       compared to the other segments, yet it offers steep
     allow it to improve EBITDA margin. The company             operating leverage. With about INR250mn of revenue
     reported EBIDTA margin of 22.3% in FY11 and we             expectation and INR10mn of cost in FY13E, the segment
     expect EBIDTA margin will be improve by 250bps over        is expected to clock EBITDA margin of 60%. This will
     FY11-13E.                                                  contribute to the widening margin bracket. Further, as
                                                                the segment grows, it has significant opportunity to
                                                                enhance the earnings.


10                                                                                           Elara Securities (India) Private Limited
                                                                                                                     Navneet Publications

Exhibit 18: Publishing holds the majority share                               Raw material risk mitigated
           4,500                                                  56          The company has consistently clocked gross margins of
           3,600                                                  55
                                                                              over 50% over the past five years. Navneet sells
                                                                              education books has a strong brand name and caters to
(INR mn)

           2,700                                                  54          low price elastic products. Historically, this has allowed it

           1,800                                                  53
                                                                              to swiftly pass on raw material price rise to consumers
                                                                              which indicate limited raw material risk.
            900                                                   52
                                                                              Exhibit 20: Raw material price risk is mitigated
              0                                                   51
                                                                                            30                                                   50
                   FY09      FY10     FY11     FY12E    FY13E
                          Publication Revenue (LHS)                                         28

                                                                                                                                                      (cost per kg)
                          Publication as % of Total sales (RHS)

                                                                              (per piece)
Source: Company, Elara Securities Estimates
Exhibit 19: Stationery growing rapidly                                                                                                           35
           3,600                                                  50
                                                                                            20                                                   30
           3,000                                                                                   FY08     FY09   FY10    FY11 FY12E FY13E
           2,400                                                                                 Publication sales (LHS)      Raw material (paper) (RHS)
(INR mn)


           1,800                                                  40          Source: Company, Elara Securities Estimates


              0                                                   30
                   FY09      FY10     FY11     FY12E     FY13E
               Stationary segment (LHS)          as a % of revenue (RHS)

Source: Company, Elara Securities Estimates

Elara Securities (India) Private Limited                                                                                                                               11
     Navneet Publications

     Valuation & Recommendation
          Sustainable growth avenues, strong earning visibility to provide growth impetus
          Healthy return ratios, strong balance sheet, with FCF and net debt position
          We initiate coverage with Buy rating assigning 16x P/E on FY13E earnings

     Sustainable      growth,                                   strong        Exhibit 22: Consistently strong liquidity

     earnings visibility                                                                 1,200                                                       35
     Education remains a defensive sector, with private
                                                                                          800                                                        30
     spending unaffected by the economic climate, leading to

                                                                              (INR mn)

     to a low earnings beta. This is evident in Navneet’s                                 600
     business, as the company has not seen a drop in volumes                              400                                                        25
     in any year over the last 5-6 years. It has a strong brand                           200
     presence, high market share and a deep distribution                                    0                                                        20
     network that allows it to operate at ~30% ROCs.                                                FY09      FY10    FY11E       FY12E    FY13E
                                                                                            Operating Cash Flow (LHS)             Free Cash Flow (LHS)
     Navneet has net cash of over INR1bn and is eying an
                                                                                            ROCE (RHS)
     investment opportunity in the content based business
     that garners high EBITDA margins of over 30%. This                       Source: Company, Elara Securities Estimates

     offers Navneet huge scalability proposition and potential                Navneet’s low asset base has allowed it to meet all capex
     growth drivers that could take the next big leap enabling                through internal accruals, translating in limited debt
     the company to clock 5 year CAGR of over 25%. The E-                     requirement. Net debt to equity hovers at 0.2x. Return
     learning is at its nascent stage and has the potential to                ratios have consistently remained upwards of 25% on
     make giant strides without significant capex and dent on                 account of firm EBITDA margins and high asset
     free cash flows.                                                         turnovers. The company’s balance sheet position has
                                                                              historically been strong.
     Strong Balance sheet
     Navneet’s liquidity position has consistently remained                   Return ratio above peers
     strong. It operates at higher margin and has limited                     We believe, Navneet should command superior
     working capital requirements. This reflects in operating                 valuation vis-à-vis peers on account of its better standing.
     cash flows which are robust. The business demands                        The company attains higher return ratios and remains a
     minimal capex as it functions on deep distribution                       strong player in the Maharashtra and Gujarat region.
     channel and high brand presence. This allows it to                       Navneet’s growth initiatives will only place it on firmer
     generate strong free cash flows consistently.                            footing.


     Exhibit 21: Peer Comparison
                                                          FY11-13E CAGR (%)
                                Mkt Cap (INR mn)     Revenues     EBITDA          PAT              ROE (%)              P/E (x)           EV/EBITDA (x)
                                              2011                                               FY12E     FY13E     FY12E        FY13E    FY12E     FY13E
     Navneet                                15,540       19.0       26.0          27.0            24.1       25.3     15.8         12.6       9.5         7.7
     Educomp                                41,850       18.2       25.6          17.1            14.5       15.6     11.8          9.3       8.0         6.4
     Everonn                                10,410       28.9       29.9          32.3            18.2       17.5     12.2          9.2       5.6         4.3
     Source: Bloomberg, Elara Securities Estimates

     *2012 estimations

12                                                                                                           Elara Securities (India) Private Limited
                                                                                                                           Navneet Publications

Exhibit 23: Valuation Overview                                                At CMP, Navneet trades at a P/E of 15.8x and 12.6x of
Valuation                                                          FY2013E    FY12E and FY13E earnings respectively. We believe
Net Profits (INR mn)                                                1,228.2   Navneet remains a very good value pick at present levels.
                                                                              Majority of revenues come from publication which
Diluted no of shares (mn)                                            238.2
                                                                              provides strong earnings visibility. As per our estimates
EPS (INR)                                                               5.2
                                                                              topline should growth a CAGR of 19% over FY11-13E.
Target Multiple (x)                                                   16.0
                                                                              PAT should increase at a CAGR of 27% over FY11-13E.
Fair Value per share (A) (INR)                                          84
CMP (INR)                                                             65.0
                                                                              We assign 16x multiple on FY13E EPS of INR5.2, deriving
                                                                              a target price of INR84 per share. We initiate coverage
Upside (%)                                                              29
                                                                              with a Buy rating and an upside of 29% from the CMP of
Source: Navneet Publications, Elara Securities Estimates
We have assigned Navneet Publication target multiple of

                                                                              Exhibit 25: Valuation band - P/E band
16x on FY13E earnings which seems justified based on
stronghold in Maharashtra and Gujarat combined with                                       100
growth opportunities in the publication business and                                       90                                                                                    20x
forays into e-learning which has potential to change the                                   70                                                                                    15x
overall revenue mix of the company and enhance                                             60                                                                                    12x
margins over time.                                                                                                                                                               10x
Exhibit 24: Valuation band - P/E band                                                      20
                                            EPS (INR)                                      10
                        -20%         -10%        5.2       +10%      +20%







                          4.2         4.7        5.2         5.8       6.3
                   14     59          66         73          81        88
    Multiple (x)

                   15     63          71         79          86        94     Source: Elara Securities Estimates

                   16     67          75         84          92       101                                                                     
                   17     71          80         89          98       107
                   18     75          85         94         104       113
Source: Elara Securities Estimates

Elara Securities (India) Private Limited                                                                                                                                                13
     Navneet Publications

         Company Description
         Navneet Publications India Limited is engaged in manufacturing of knowledge-based information in educational
         and general books form, and in paper and other stationery items. The Company operates in three segments:
         Publication, Stationery and E-learning. The publication segment is categorized as curriculum and non curriculum
         verticals. The curriculum segment produces books for the K-12 (Kindergarten to 12th Standard) in Maharashtra and
         Gujarat. The non-curriculum produces socio-cultural books. This includes various titles in the children and general
         books categories, viz., activity books for children, board books, story books, health related books, cookery books,
         mehendi and embroidery books. The E-learning is still at a nascent stage with about 475 schools tie ups. Its products
         are sold under the brand names of Navneet, Vikas, Gala, FfUuNn, Boss and Navneet Nxt.

     Board of Directors& Management
     Shivji K Vikamsey – Chairman                                         Sunil Gala - President Finance
     Mr. Shivji K Vikamsey is Independent Chairman of the                 Jitendra L Gala - Director (Marketing)
     Board of Navneet Publications Limited. He is practising              Dungarshi R Gala – Director - Educational Books
     Chartered Accountant. He has wide experience in the                  Publishing
     field of Finance and Accounts.
                                                                          Harakhchand - Director - Sales & Distribution
     Amarchand R Gala - Managing Director                                 He has wide experience in the field of Educational Books
     Shri. Amarchand R. Gala is Managing Director, Executive              Publishing. He is actively involved in formulating the
     Director of Navneet Publications He has experience of                strategy for publishing Educational Books.
     over five decades in the field of educational book
                                                                          Dr. R. Varadarajan - Independent Director
                                                                          He is a senior educationist having experience in the field
     Jaisinh K Sampat - Joint Managing Director                           of education in India and overseas.
     Shri. Jaisinh K. Sampat is Joint Managing Director,
     Executive Director of Navneet Publications. He is a
     Science graduate, having over three decades experience
     in the field of marketing of Educational Books. He is
     actively involved in formulating the Marketing strategy
     for marketing of educational books.

     Exhibit 26: Business division

                                                     Navneet Publications (India) Limited

                                Content Based Products                                               Stationery Products
                                         55%                                                                45% 

                 Curriculum         Non-Curriculum           E-Learning                                              Non-Paper
                                                                                            Paper Stationery
                 Publications        Publications             Products                                               Stationery
                    90%                  9%                      1%                                                     40%

     Source: Company

14                                                                                                Elara Securities (India) Private Limited
                                                                                                                                                                                 Navneet Publications

Coverage History




















                                                                                                        Not Covered                            Covered

         Date                           Rating                          Target Price                    Closing Price
    1    13-Jun-2011 Buy                                                INR84                           INR65

Guide to Research Rating
BUY                                                       Absolute Return >+20%
ACCUMULATE                                                Absolute Return +5% to +20%
REDUCE                                                    Absolute Return -5% to +5%
SELL                                                      Absolute Return < -5%

Elara Securities (India) Private Limited                                                                                                                                                                                                          15
     Elara Securities (India) Private Limited

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     Disclaimer for non U.S. Investors
         The information contained in this note is of a general nature and is not intended to address the circumstances             of any
         particular individual or entity. Although we endeavor to provide accurate and timely information, there can                be no
         guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the   future.
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         particular situation.

                                                                     Elara Securities (India) Private Limited

Disclosures for U.S. Investors
The research analyst did not receive compensation from Navneet Publications India Limited.
Elara Capital Inc.’s affiliate did not manage an offering for Navneet Publications India Limited.
Elara Capital Inc.’s affiliate did not receive compensation from Navneet Publications India Limited in the last 12 months.
Elara Capital Inc.’s affiliate does not expect to receive compensation from Navneet Publications India Limited in the next 3

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    investor and the investor may get back less than the amount invested. Where an investment is described as being likely to
    yield income, please note that the amount of income that the investor will receive from such an investment may fluctuate.
    Where an investment or security is denominated in a different currency to the investor’s currency of reference, changes in
    rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor. The
    information contained in this report does not constitute advice on the tax consequences of making any particular
    investment decision. This material does not take into account your particular investment objectives, financial situations or
    needs and is not intended as a recommendation of particular securities, financial instruments or strategies to you. Before
    acting on any recommendation in this material, you should consider whether it is suitable for your particular circumstances
    and, if necessary, seek professional advice.
    Certain statements in this report, including any financial projections, may constitute “forward-looking statements.” These
    “forward-looking statements” are not guarantees of future performance and are based on numerous current assumptions
    that are subject to significant uncertainties and contingencies. Actual future performance could differ materially from these
    “forward-looking statements” and financial information.

     Elara Securities (India) Private Limited

           India                                  Europe                             USA                          Asia / Pacific
           Elara Securities (India) Pvt. Ltd.     Elara Capital Plc.                 Elara Securities Inc.        Elara Capital (Singapore) Pte.Ltd.
           Kalpataru Synergy,6th                  29 Marylebone Road,                477 Madison Avenue,          30 Raffles Place
           Level,East Wing, Opp Grand             London NW1 5JX,                    220, New York,               #20-03, Chevron House
           Hyatt, Santacruz East,                 United Kingdom                     NY 10022, USA                Singapore 048622
           Mumbai – 400 055, India                Tel : +4420 7486 9733              Tel :212-430-5870            Tel : +65 6536 6267
           Tel : +91 22 4062 6868
     Harendra Kumar                 Head - Institutional Equities & Global Research         +91 22 4062 6871
     Joseph K. Mammen               Global Head Sales & Trading
                                    London         +44 78 5057 7329                        +44 20 7467 5578
     Jonathan Camissar              London         +44 79 1208 7272                    +44 20 7299 2575
     Anuja Sarda                    London         +44 77 3819 6256                          +44 20 7299 2577
     David Somekh                   New York       +1 646 808 9217                          +1 212 430 5872
     Nikhil Bhatnagar               New York       +1 718 501 2504                      +1 212 430 5876
     Samridh Sethi                  New York       +1 718 300 0767                         +1 212 430 5873
     Amit Mamgain                   India          +91 98676 96661                          +91 22 4062 6843
     Koushik Vasudevan              India          +91 98676 96668                     +91 22 4062 6841
     Nirav Shah                     India          +9190040 27862                             +91 22 4062 6842
     Prashin Lalvani                India          +91 9833477685                        +91 22 4062 6844
     Saira Ansari                   India          +91 98198 10166                          +91 22 4062 6812
         Sales Trading & Dealing
     Ananthanarayan Iyer            India          +91 98334 99217                +91 22 4062 6856
     Dharmesh Desai                 India          +91 98211 93333                        +91 22 4062 6852
     Manoj Murarka                  India          +91 99675 31422                         +91 22 4062 6851
     Vishal Thakkar                 India          +91 98694 07973                        +91 22 4062 6857
     Abhinav Bhandari               Analyst        Construction, Infrastructure         +91 22 4062 6807
     Aliasgar Shakir                Analyst        Mid caps                              +91 22 4062 6816
     Alok Deshpande                 Analyst        Oil & Gas                              +91 22 4062 6804

     Anand Shah                     Analyst        Paints, Fertilizers                        +91 22 4062 6821
     Ashish Kumar                   Economist                                               +91 22 4062 6836
     Himani Singh                   Analyst        FMCG, Hotels, Hospitals                  +91 22 4062 6801
     Mohan Lal                      Analyst        Media & Retail                              +91 22 4062 6802
     Pankaj Balani                  Analyst        Derivative Strategist                   +91 22 4062 6811
     Pralay Das                     Analyst        Information Technology, Telecom             +91 22 4062 6808
     Ravindra Deshpande             Analyst        Metals & Cement                +91 22 4062 6805
     Ravi Sodah                     Analyst        Cement                                     +91 22 4062 6817
     Sumant Kumar                   Analyst        FMCG                                     +91 22 4062 6803
     Surajit Pal                    Analyst        Pharmaceuticals, Real Estate              +91 22 4062 6810
     Rahul Modi                     Analyst        Power ,Capital Goods                       +91 22 4062 6859
     Mona Khetan                    Associate      Strategy, Information Technology            +91 22 4062 6814
     Pooja Sharma                   Associate      Construction, Infrastructure             +91 22 4062 6819
     Gurunath Parab                 Production                                            +91 22 4062 6815
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                                                                       CLEARING CODE: M51449.
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