EDUCOMP (HDFC SECURITIES)

• Outlook and Valuation
We expect Educomp to record a revenue and net profit CAGR of 46.4% and 45.3% between FY09 to FY11. At the CMP, the stock is trading at a P/E of 24.7x and 18.7x our estimated EPS of Rs106.8 and Rs140.9 for FY10 and FY11. With a stable government geared to growth at the centre we expect sectors including Education will get a boost benefiting companies like Educomp. We continue to rate Educomp a ‘Marketperformer’ with a revised target price of 2,670. Though, we earlier valued Educomp at 22x of FY10 estimated EPS, we now value Educomp at 25x of its FY10E EPS of Rs106.8 as we believe the PE ratios of high growth companies in the education sector will expand faster due to the strong government at the centre.

To see full report: EDUCOMP