Navneet Education Limited — Q4 FY25 earnings call

Call held 20 May 2025

Management summary

Navneet Education reported a subdued FY25 with marginal revenue growth and a decline in profitability, primarily due to a weak domestic stationery market and continued underperformance in its CBSE subsidiary, Indiannica. Management expressed strong optimism for FY26, pinning hopes on a long-awaited curriculum change in Maharashtra and Gujarat to revive the core publication business. While the export stationery segment remains a bright spot, the company faces uncertainty from potential US tariff changes and intense competition in the domestic market.

Highlights

  • FY25 Consolidated Revenue grew marginally by ~2.5% to ₹1,786 crores.

  • FY25 Consolidated PAT stood at ₹174 crores, a decline of ~5% from ₹183 crores (normalized) in the previous year.

  • Domestic Stationery segment de-grew by 13% in FY25, driven by a 9% price realization drop and a 4% volume decline.

  • Export Stationery segment grew by 12% in FY25, despite price reductions due to lower paper costs.

  • Indiannica (CBSE subsidiary) reported a revenue of ₹55 crores (vs ₹59 crores in FY24) with an EBITDA loss of ₹1.6 crores.

  • Management guided for 10-11% consolidated volume growth and ~10% PAT growth in FY26, driven by an expected curriculum change.

  • A significant capex of at least ₹100 crores per year is planned for the next three years in the Stationery business.

  • Publishing margins are expected to improve by 150-200 bps in FY26 on the back of higher volumes.

Concerns

  • Adverse US Tariffs

Key financials

  1. Consolidated Revenue ₹1,786 Cr +2.5%YoY
  2. Consolidated PAT ₹174 Cr -4.9%YoY
  3. Total Debt ₹20 Cr

What they filed

Q1 FY27: revenue down 0.9%, net profit down 8.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue271 280 389 792 246 −9%251 −10%394 +1%785 −1%
EBITDA9 29 56 230 8 −11%4 −86%40 −29%204 −11%
Net profit3 26 30 161 -6 −300%117 +350%25 −17%148 −8%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Publication
    3% FY25 Revenue Growth
  • Stationery (Domestic)
    -13% FY25 Revenue Growth-9% Price Realization Change-4% Volume Change
  • Stationery (Export)
    12% FY25 Revenue Growth
  • Indiannica (Subsidiary)
    ₹55 Cr Revenue₹59 Cr Revenue (FY24)₹-1.6 Cr EBITDA₹-6 Cr PAT

Guidance & targets

Volume

  • Consolidated Volume Growth Volume · FY26 · Medium confidence 10-11%
    So, as far as volume growth is concerned at a company level, we are foreseeing that on an average 10 to 11% volume growth, we will see.

    — Mr. Sunil Gala, MD

  • Publication Segment Volume Growth Volume · FY26 · High confidence 6-7%
    If I talk about Publication around 6-7%, exports around 20-odd percent, and domestic around 5-6% again.

    — Mr. Sunil Gala, MD

  • Export Segment Volume Growth Volume · FY26 · Medium confidence ~20%

    — Mr. Sunil Gala, MD

Profitability

  • Consolidated PAT Growth Profitability · FY26 · Medium confidence ~10%
    And with that, the bottom line also should grow by around 10%. So, this is the expectation for FY26.

    — Mr. Sunil Gala, MD

Margin

  • Publishing Business Margin Improvement Margin · FY26 · Medium confidence 150 to 200 basis points
    So, if we achieve volumes that I just mentioned, then margins should definitely improve by nearly 150 to 200 basis points in Publishing business.

    — Mr. Sunil Gala, MD

  • Stationery Business Steady State EBITDA Margin Margin · Ongoing · High confidence 12% to 13%
    So, steady state, you can consider 12% to 13% EBITDA margin.

    — Mr. Sunil Gala, MD

Capex

  • Annual Capex in Stationery Business Capex · next 3 years · High confidence at least 100 crores
    And further, we have decided to invest at least 100 crores every year in Stationery business... it will be on an average 100 crores will be spent in next three years.

    — Mr. Sunil Gala, MD

Risks & concerns

  • Adverse US Tariffs

    high

    The final impact of US tariffs on exports is unknown and could affect future orders, though current orders are secure. This is the primary external risk highlighted.

    Management acknowledged

  • Continued Losses in Indiannica Subsidiary

    medium

    The subsidiary continues to be loss-making at the EBITDA and PAT level, with management admitting past turnaround commitments were not met.

    Both acknowledged

  • Intense Competition in Education Sector

    medium

    Management cited 'unhealthy competition' in the CBSE segment (leading to high discounts) and competition from the unorganized sector in domestic stationery as reasons for underperformance.

    Management acknowledged

  • Dependence on Curriculum Change Cycle

    medium

    The publication segment's growth is heavily dependent on the government-mandated curriculum changes, which have not occurred for seven years, leading to subdued performance.

    Management acknowledged

Areas of evasion (1)

  • Declined to give specific number of titles per school for Indiannica, but this was a minor point.

Q&A highlights

3 direct
Continued losses and strategic rationale for the Indiannica subsidiary Direct
I fully agree with you that for several years, we have not been able to perform... I do not want to commit now because I had myself said, but it has not come true. But I would say that we will have to improve upon as far as this individual business is concerned.

Highlights a long-standing issue of a loss-making acquisition (8-10 years) that continues to drag on performance, with management acknowledging past commitments were not met.

Asked by Mr. Niraj Vijay - ProsperoTree

Specific financial projections for FY26 Direct
Analyst: 'Fine. So, basically, approximately 200 crores of net profit on a console basis, we can expect for the next... for the current year FY26, approximately 200 crores of net profit.' Management: 'Yes, yes, yes.

This exchange provided the most direct confirmation of FY26 profit expectations, moving from a percentage growth guidance to an absolute number, which is a key takeaway for investors.

Asked by Mr. Ranjan Shah – Individual Investor

Impact of potential US tariffs on the growing export business Direct
Till date, it is normal. Whatever orders that we were expecting for the year based on the contracts that we have entered into, have come in... Now, we are talking about going forward, next subsequent year. For that, I think we all will have to wait till the final decision on tariffs.

Clarifies that the immediate business for the current US back-to-school season is secure, but confirms that future orders are at risk pending the tariff decision, quantifying a key external risk.

Asked by Mr. Niraj Vijay - ProsperoTree

2 min read 6 chapters

Detailed narrative

FY25 Performance: A Year of Stagnation

Navneet Education's FY25 was marked by tepid growth, with consolidated revenue rising just 2.5% to ₹1,786 crores and PAT declining by about 5% to ₹174 crores. The performance was a mixed bag across segments. The core Publication business grew by a mere 3%, hampered by the absence of a curriculum change for the seventh consecutive year in its key markets of Maharashtra and Gujarat. This stagnation has fueled a strong second-hand book market, impacting new book sales.

Stationery Segment: A Tale of Two Markets

The Stationery business presented a stark contrast between its domestic and export operations. The domestic segment witnessed a significant 13% de-growth in FY25, attributed to a 9% drop in price realization from lower paper costs and a 4% volume decline due to competition from the unorganized sector. Conversely, the export stationery business was a key growth driver, expanding by 12% despite management having to pass on lower paper prices to international clients.

Indiannica Subsidiary: A Persistent Drag

The CBSE-focused subsidiary, Indiannica, continues to be a strategic challenge. In FY25, its revenue declined to ₹55 crores from ₹59 crores in the prior year. More concerningly, it posted an EBITDA loss of ₹1.6 crores, a deterioration from break-even last year, and a PAT loss of ₹6 crores. Management acknowledged the long-standing underperformance, citing 'unhealthy competition' and the high cost of digital investments, and admitted that previous turnaround commitments had not materialized.

FY26 Outlook: Pinning Hopes on Curriculum Change

Management laid out a confident outlook for FY26, driven almost entirely by the announced curriculum change cycle starting from the new fiscal. They guided for a 10-11% consolidated volume growth, led by 6-7% growth in Publications and a strong 20% in Exports. This is expected to translate into a PAT growth of around 10%, with management affirming an analyst's projection of ~₹200 crores in net profit. Furthermore, the higher volumes in publishing are anticipated to expand margins by 150-200 basis points.

Strategic Focus & Capex: Non-Paper and Exports

To counter challenges, Navneet is shifting its strategic focus. In domestic stationery, the company is aggressively introducing non-paper products, which currently form 8% of the mix, to improve growth and margins. In exports, new categories like file folders already contribute 17-18% of revenue. To support this, a significant capex of at least ₹100 crores per year is planned for the next three years to expand stationery manufacturing capacity, including land, construction, and machinery.

External Risk: The US Tariff Overhang

The primary external risk highlighted by management is the uncertainty surrounding US tariffs, as the US is a major export market. While current orders for the back-to-school season are confirmed and not cancelled, future business for the next cycle is in a 'wait and watch' mode pending the final tariff decision, expected around July 2025. Management noted that India currently has a tariff advantage over China (10% vs 30%), but any adverse change could impact the high-growth export segment.

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