Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- S Chand and Co Ltd (BOM:540497, Financial) achieved the highest ever gross margin in the company's history at 72%, up from 69% last year.
- The company reported the lowest working capital metrics for Q1 in its history, with net working capital days reduced to 132 days.
- Strong cash flow generation led to an increased net cash balance of 82 million versus 600 million at the end of Q4.
- The company has engaged in content licensing partnerships with leading technologies, opening a new vertical for higher education.
- S Chand and Co Ltd (BOM:540497) expects double-digit operating revenue growth for the year and has upgraded its EBITDA margin band to 17%-19% from 16%-18% last year.
Negative Points
- The company reported a minor PAT loss of 3 million versus a profit of 11 million in the same period last year.
- Increased expenses on account of NCS content development and implementations resulted in lower EBITDA and profits.
- There have been delays in admissions and results, affecting the company's performance.
- The adoption of the new curriculum by schools has been slower than expected, impacting sales.
- The company anticipates lower paper procurement due to higher than expected raw material inventory from the previous year.
Q & A Highlights
Q: How do we see the progress of our end guarantee releasing curriculum process?
A: While we are not confirmed in terms of the number of classes that will have books from NCLT, we expect most of the books to be out by the end of December. This should ensure that all books are available for the next academic year, minimizing confusion and facilitating adoption by schools. (Atul Soni, Head, IR & Strategy)
Q: What is the expected adoption rate of the new curriculum this year?
A: We expect around 40% to 50% of schools to adopt the new curriculum this year, compared to 10% to 15% last year. The adoption rate will depend on the timely release of the new books. (Saurabh Mittal, Chief Financial Officer)
Q: Can you elaborate on the increase in EBITDA guidance?
A: The increase in EBITDA guidance is due to softer paper prices, inventory optimization, and higher-margin licensing agreements. We are also providing content for some JNI projects, which is a high-margin business. (Atul Soni, Head, IR & Strategy)
Q: What is the level of inventory we are maintaining, and how do current paper prices compare?
A: We have a significant inventory of paper, ordered last year in anticipation of higher demand. Current paper prices are slightly lower than what we paid last year. We will buy 25% to 30% less paper this year. (Saurabh Mittal, Chief Financial Officer)
Q: What is the revenue impact of the new licensing agreements?
A: We expect about 25 crores in revenue from these agreements this year. The requirement for data is vast, and we have a large repository of content to offer. (Atul Soni, Head, IR & Strategy)
Q: What is the overall revenue growth guidance for the current financial year?
A: We are targeting double-digit operating revenue growth for the year. However, we are not comfortable giving a specific number at this time due to various moving parts. (Riya Mehta, Aequitas Investment - Analyst)
Q: What is the expected impact of the new curriculum on financials if books are released by December?
A: If books are released before December, we expect a positive revenue impact in Q3 and Q4. If released later, the impact will be seen in the next financial year. (Saurabh Mittal, Chief Financial Officer)
Q: What is the competitive intensity in the market with the new curriculum?
A: Larger players like us have an advantage due to better content quality, marketing, and reach. Smaller players may struggle initially but could catch up over time. (Saurabh Mittal, Chief Financial Officer)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
