Views on Tree House 4QFY2014 results - Angel Broking

Views of Ms. Twinkle Gosar (Equity Research Associates-Mid Caps, Angel Broking) on Tree House 4QFY2014 results:

"Tree House Accessories and Education Ltd. (THEAL) reported mixed set of numbers for 4QFY2014. Owing to addition of 46 pre-schools in 4QFY2014, top-line surged by 21.6% yoy to Rs. 35.8cr higher than our estimate of Rs. 31.6cr. EBITDA grew by 33.8% yoy to Rs. 19.0cr while margins expanded by 483bp yoy to 53.1% (owing to reduced other expenses by 647bp). However, due to absence of other income which was ~Rs. 2cr in 4QFY2013 and increased interest outgo (Rs. 2.5cr vis-à-vis Rs. 1.2cr in same quarter previous year), adjusted PAT too reported relatively lower yoy growth of 9.5% to Rs. 8.0cr, lower than our estimate of Rs. 9.1cr.

On annual front, top-line surged by 37.9% to Rs. 158cr on back of robust pre-school expansion plans of the company (111 preschools during the year). EBITDA for the year grew by 44.3% to Rs. 89cr while margins stood at 58.1%, 405bp higher mainly on account of lower overall expenses. Subsequently, bottom-line for the company grew by 31.8% to Rs. 44cr while margins at 31.8%, 54bp lower mainly due to lower other income for the year.

Going forward, with consistent expansion of pre-schools, THEAL is poised to register robust growth ahead. However, considering the recent run-up in the stock price, we recommend Accumulate rating on the stock with target price of Rs. 364, based on 19x PE for FY2016E earnings."

Shares of TREE HOUSE EDUCATION & ACCESSORIES LTD. was last trading in BSE at Rs.366.1 as compared to the previous close of Rs. 362.05. The total number of shares traded during the day was 15646 in over 557 trades.

The stock hit an intraday high of Rs. 374 and intraday low of 362. The net turnover during the day was Rs. 5769319.

Source : Equity Bulls

Keywords