CL Educate Limited- Stock Analysis

18 May 2019  Read 659 Views

CL Educate Ltd focuses on diverse segments of education, and caters to learners from multiple age-groups. It is primary engage in business of educational products and services. It majorly operates in 2 segments i.e.; the consumer and enterprise. The consumer segment includes the business of test preparation and Training, Publishing and Content Development & Campus Recruitment training program.Under the enterprise the company offers integrated solutions to educational institutions and Universities across India. It operates through consumer Test Prep, Consumer Publishing, Enterprise Corporate and other segment. The company offers test preparation and training services under career launcher brand; publishing and content development services under the GK Publications brand. It also provide integrated solutions, including business advisory and outreach support services under the CL Media branch and Research incubation and support services under the brand Accendere brand.

What’s Good?

CL Educate has the first mover advantage in filling the educational gap that is faced by this hugely populated country, where maximum population is under the age of 24 years which provides the company with lot of future growth. As lot and lot of students subscribe to their services and this creates a network effect and thus helps them to increase their market share.

Management Analysis

  • Management has successfully scaled its business in recent years.
  • Management is properly using its Free Cash Flows in acquisition of ETEN and Accendere.
  • Management has substantially increased its stake in existing subsidiary.

Management Score 8/10

Industry Analysis

  • The Education sector in India is poised at a crucial stage in its growth
  • India’s demographic advantage of having a large population of youth, coupled with low gross enrolment ratios, presents a huge opportunity to education sector players.
  • The education sector in India is estimated at US$ 91.7 billion in FY18 and is expected to reach US$ 101.1 billion in FY19.
  • The Government of India has allowed 100 per cent Foreign Direct Investment (FDI) in the education sector through the automatic route since 2002.

Industry Score 9/10

Business Analysis

  • As it an educational industry it helps them to get steady cash flows all twelve months. This sector will always be at boom in the market as lot and lot of people are concerned about their career and will access their products. 
  • Also it is a Recession-proof sector and the demand will grow after each passing year.
  • Lower cost of providing services to the customers.

Business Score 9/10

 Valuation Analysis

As the company is at the growing stage in market the right way to value the company would be through Price to Sales multiple. Assuming that price to sales of industry would grow at 1.9 and price to book value of industry would be 2.12. I value the company to be fairly valued.

Valuation Score 9/10

 Total Score - 35/40

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Disclaimer- The article is for educational purpose only. Nothing in this article should be interpreted as investing advice.
Disclosure- We might have recommended this stock to our advisory clients.

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