S Chand And Company Limited

S Chand & Company Limited reported consolidated revenues of Rs1,026 million, an EBITDA Loss of Rs91 million, and a PAT Loss of Rs141 million for Q1 FY26. This performance was primarily influenced by a shift in content licensing (AI Datasets) revenues, which were Rs30 million in Q1 FY26 compared to Rs115 million in Q1 FY25. Management expects this revenue to be recuperated in Q2, indicating a temporary impact on the quarter's results.

The company achieved its lowest Q1 working capital metrics in its history, with receivable days at 89 (down from 92 in Q1 FY25), inventory days at 218 (down from 261), and net working capital days at 119 (down from 132). This strong performance contributed to robust cash flow generation, resulting in an increased net cash balance of Rs1,161 million, up from Rs1,036 million in Q4 FY25, even after distributing a dividend of Rs141 million.

S Chand saw an encouraging response to its new product MyZen in its first academic season. CUET-UG online courses, launched in Q4 FY25, continued to receive a steady response from students, with some achieving success. The company has now expanded its offerings by launching CUET-UG and Class 12 online courses under TESTCOACH to provide students with a more cohesive study plan.

The company's new warehousing facility is now functional, and an integrated press project is underway, expected to be completed within 12 months. A CapEx outlay of Rs35-40 crores is planned over the next two years, primarily for the printing press. This investment is anticipated to provide a 15-20% advantage in production capacity, efficiency, and cost, ensuring sufficient infrastructure for the next 8-10 years.

NCERT is expected to release new syllabi for Classes 4th, 5th, 7th, and 8th over the course of FY26, with full adoption across all classes anticipated by FY27. Management noted that the piecemeal and delayed implementation of the new curriculum has not yet yielded the full expected benefits, despite the company being fully equipped to utilize this opportunity.

The company is actively pursuing M&A opportunities to fill portfolio gaps, specifically looking at the Test Prep segment (where diligence is ongoing), International Board segment, and regional segments. These targets are relatively small, with a combined revenue size of less than Rs50 crores and an estimated maximum payout of Rs50-60 crores, which will be funded through existing internal accruals of Rs116 crores.

The AI content licensing business involves meeting customer requirements by leveraging existing content and sourcing from outside, with a current 50-50 split between own and sourced content. While margins for own content are higher, the overall opportunity is considered huge and is expected to last for at least the next 2-3 years. The company is currently engaging with seven potential clients, up from two last year, indicating growing interest.

Paper prices have been soft, declining by 5-7% since April 2025, and are currently stable. Management expects prices to remain on the soft side for the next 3-4 months, depending on foreign policies and tariffs. This favorable trend in input costs is a positive for the company's profitability.