That is my first stock recommendation. The stock is currently selling at ridiculously low levels. And it has been on a consistent downward trend for a long time. I thought that the stock was a good buy at 450, where it was trading a month or two ago. So, at the current price of 285 it is a steal!!
The positives:
- The biggest company in the education sector in India.
- Good solid earnings growth throughout.
- Potential growth opportunities are unlimited at this stage. Penetrations of less than 3% in most of the markets. Although for completeness let me say that even with such low penetrations, the company is a market leader in most of these segments.
- Very well diversified, covering almost the entire value chain in the sector.
- Good experienced management.
Negatives
- Uncertain regulatory environment. For example, all the schools in the K-12 sector should be operated on a non-profit basis.
- Major part of the earnings from a single product - Smartclass. School learning solutions accounted for 77.5% of the topline in FY'10
Growth opportunities for the company are unlimited as i've mentioned before. And that is the main reason for my recommendation.
