Educomp Solutions is a leader in providing end-to end solutions to government and private schools.
At the end of FY2008, Educomp had 933 private schools under its coverage, with an addressable market of 12,000 schools for its SmartClass business. We expect Educomp’s SmartClass revenues to grow at a CAGR of 70% over FY2008-10E.
Educomp, with its SmartClass, ICT and Professional Development for Teachers products is the front-runner in the education industry, well-positioned to leverage the growth opportunity and would remain the fastest-growing company in this space.
The company now plans to venture into new businesses of education, organically as well as inorganically in its attempt to increase its addressable market and have a presence in new geographies.
On the back of these initiatives we estimate the company’s topline and bottomline to grow at CAGR of 76% and 67% over FY2008-10E, respectively. We suggest a BUY in this counter and DCF-based target price of Rs4,051.