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Educomp FY12 outlook weak after Jan-March profit surges

Educomp FY12 outlook weak after Jan-March profit surges
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First Published: Mon, May 30 2011. 06 16 PM IST
Updated: Mon, May 30 2011. 06 16 PM IST
New Delhi: Educomp Solutions Ltd expects its consolidated profit in FY12 to rise over 17% mostly on planned stake sales, according to a presentation to be made by the company to investors on Monday, signalling the company is struggling to grow its profit.
The educational IT services provider expects “proposed stake sale of strategic investments” to add Rs 60-75 crore to profit and revenue in FY12, according to the presentation.
After stake sale, profit is likely to be Rs 400 crore in FY12, on a revenue of Rs 1760 crore. Educomp’s consolidated net profit for FY11 was Rs 389 crore.
“This is a very weak guidance. There is no growth on EPS (earnings per share),” said Ankur Rudra, an analyst with Ambit Capital.
One worrying sign is that if the company decides to sell off a loss-making business, then profitability should rather have expanded for the year, Rudra said.
“They have been unable to create any success story beyond smart class...there will clearly be a decline in profitability.” he added.
Educomp, earlier on Monday, also approved a plan to raise up to $250 million and said it will restructure $78.5 million foreign currency bonds.
Earlier on Monday, Educomp said profit for January-March more than doubled, with revenue at its primary school learning solutions business zooming over 40%.
Educomp shares, valued at about $1 billion, closed up about 1% at Rs 475.30 on the Bombay Stock Exchange.
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First Published: Mon, May 30 2011. 06 16 PM IST