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Operating performance remains muted

Education companies under our coverage are expected to report 8.5% YoY growth in top-line in Q1FY26E. DOMS IN is likely to sustain the growth momentum driven by Uniclan’s consolidation. Nonetheless, fall in syndication revenue is likely to suppress SCHAND IN’s top-line, while NELI IN’s struggle for growth would stem from rising usage of second-hand books and falling realization in the domestic stationery market. On the operating performance front, DOMS IN is likely to witness 210bps compression in EBITDA margin due to consolidation of the personal hygiene business. On the other hand, SCHAND IN is likely to report a loss at operating level amid declining contribution of high-margin syndication revenue, while NELI IN’s EBITDA margin is likely to witness a compression of 40bps. Among our coverage universe, DOMS IN remains our preferred pick with a TP of Rs3,087 (60x FY27E EPS, no change in target multiple).

DOMS’s top-line to increase by 23.6% YoY: DOMS is likely to report a robust 23.6% YoY growth in top-line to Rs5,501mn in Q1FY26E, aided by the consolidation of Uniclan (diaper business). The core stationery business is expected to grow by 18.0% YoY, while the remainder of top-line expansion (~Rs250mn) is expected to stem from Uniclan’s contribution. However, due to lower profitability of the personal hygiene segment, we expect EBITDA margin to contract by 210bps YoY to 17.3%. We retain ‘BUY’ on the stock with a TP of Rs3,087 (60x FY27E EPS).

NELI’s top-line to remain flat YoY: We expect NELI’s publishing top-line to increase 3.0% YoY to Rs4,330mn in Q1FY26E, while the stationery top-line is likely to be flat at Rs3,789mn. EBIT margin for publishing/stationery segment is expected to be at 37.0%/16.0% respectively. Overall, we anticipate top-line to grow 1.9% YoY to Rs8,127mn with an EBITDA margin of 27.1%. We retain ‘HOLD’ on NELI IN with an SOTP-based TP of Rs145. We value the publishing business at 11x FY27E (no change in target multiple), while the K-12 business is valued at Rs28 per share.

SCHAND to report loss at EBITDA level: SCHAND is likely to report a 4.9% YoY decline in its top-line to Rs1,052mn, with an EBITDA loss of Rs65mn in Q1FY26E. Amid anticipation of higher volumes from announcement of new competencybased textbooks for grades 4, 5, 7 and 8, we expect top-line growth to be in early double-digits for FY26E with an EBITDA margin of 19.3%. We retain ‘BUY’ on the stock with a TP of Rs286 (11x on FY27E EPS).

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