S Chand And Company Limited

S Chand & Company reported consolidated revenues of ₹493 million for Q2 FY26, marking a 32% year-on-year increase. Despite this revenue growth, the company recorded an EBITDA Loss of ₹601 million and a PAT Loss of ₹536 million for the quarter. The second quarter is noted as historically the smallest in terms of revenues for the company. The company maintained a net debt-free status, ending the quarter with a net cash balance of ₹235 million, an improvement from ₹93 million in Q2 FY25.

The content licensing business, particularly AI Datasets, experienced a shift in revenues from Q1 to Q2, contributing to increased billing in Q2 compared to the previous year. However, gross margins for 1H FY26 were lower due to reduced pricing in AI Datasets, despite higher volumes. H1 FY26 content licensing revenues stood at ₹142 million, down from ₹160 million in H1 FY25. Management expects this business to reach approximately ₹25 crores for the current year, up from ₹19.5 crores last year, and is working to make it a steadier revenue stream by increasing customer count from 2 to 4, with discussions ongoing for a fifth.

A key highlight for Q2 FY26 was the company's continued focus on improving working capital metrics, including Receivable Days, Inventory Days, and Net Working Capital (NWC) days. These efforts contributed to the company achieving one of its lowest working capital metrics in its history. The company remained net debt-free with a net cash balance of ₹235 million at the end of the quarter, significantly higher than ₹93 million in Q2 FY25. This cash position was maintained despite a dividend payment of ₹141 million in 1H FY26.

S Chand & Company has finalized an acquisition in the international curriculum space, valued at approximately US$1.5 million, which is expected to be completed in Q3. This move aims to fill portfolio gaps, particularly in segments like IGCSE and IB, where the company currently lacks a strong brand and extensive book offerings. The company's existing CBSE catalogue is considered full, and future acquisition targets will focus on areas like international curriculum expansion, school regional segments, non-core textbook areas (supplementary, test prep), and computer sciences.

The New Education Policy (NEP) and the staggered release of new NCERT books have created some confusion in the market, delaying the full realization of growth benefits. While PDF versions of new NCERT books for Classes 4th, 5th, 7th, and 8th are available, physical availability is pending. The full adoption of the new syllabus books for K-12 is anticipated by FY27. Management expects some benefits this year, with more significant impacts projected from next year onwards as the curriculum rollout stabilizes.

Raw material prices have remained largely stable, with a slight decrease of about 5% compared to last year. However, this benefit has been offset by an increase in the Goods and Services Tax (GST) on paper, which rose from 12% to 18%. This change in GST effectively negates any positive impact from lower raw material costs on the company's expenses.