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SYNOPSIS
CORE Edu. & Tech. Ltd. provides
exhaustive range of products and
solutions spanning across all stages
of education - K12, higher education
and vocational training courses.
During the quarter ended, the robust
growth of Net sales is increased by
61.89% to Rs. 4818.90 million.
CORE Education & Technologies Ltd
has recommended dividend for Rs.
0.60 per Equity Share of Rs. 2/-
each for 2011-2012.
CORE has bagged contract from
Gujarat Govt. to implement Computer
Aided Learning (CAL) in 3236 Primary
Schools for Rs. 124 crores.
Net Sales and PAT of the company
are expected to grow at a CAGR of
27% and 27% over 2011 to 2014E
respectively.
Years Net sales EBITDA Net Profit EPS P/E
FY 12 16378.57 6542.00 3230.91 28.73 10.37
FY 13E 19654.28 7782.73 3915.29 34.81 8.56
FY 14E 22602.43 8946.72 4579.03 40.71 7.32
Stock Data:
Sector: IT
Face Value Rs. 2.00
52 wk. High/Low (Rs.) 324.00/245.20
Volume (2 wk. Avg.) 20228.00
BSE Code 512199
Market Cap (Rs in mn) 33516.06
Share Holding Pattern
1 Year Comparative Graph
CORE Edu. & Tech BSE SENSEX
C.M.P: Rs. 298.00 Target Price: Rs. 335.00 Date: May 9th 2012 BUY
CORE Education & Technologies Ltd Result Update: Q4 FY12
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Peer Group Comparison
Name of the company CMP(Rs.) Market Cap (Rs. mn.) EPS(Rs.) P/E(x) P/Bv(x) Dividend (%)
CORE Edu. & Tech. Ltd 298.00 33516.06 28.73 10.37 1.87 30.00
Polaris Soft. 128.55 15354.30 15.36 8.37 1.66 90.00
Rolta India 71.55 11543.10 22.15 3.23 0.50 35.00
Tata Elxi. 201.35 6269.70 10.90 18.47 3.47 70.00
Investment Highlights
Q4 FY12 Results Update
CORE Education & Technologies Ltd. has reported net profit of Rs 729.29 million
for the quarter ended on March 31, 2012 as against Rs. 702.77million in the same
quarter last year, an increase of 12.74%. It has reported net sales of Rs 4818.90
million for the quarter ended on March 31, 2012 as against Rs.2976.62 million in
the same quarter last year, a rise of 61.89%. Total income grew by 69.81% to Rs.
5098.58 million from Rs. 3002.54 million in the same quarter last year. During the
quarter, it reported earnings of Rs 7.04 a share.
Quarterly Results - Consolidated (Rs in mn)
As At Mar-12 Mar-11 %change
Net sales 4818.90 2976.62 61.89
PAT 729.29 702.77 12.74
Basic EPS 7.04 6.44 9.41
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� Net Sales & PAT growth
During the quarter, Net sales rose by 61.89% to Rs. 4818.90 million from Rs.2976.62
in the same the quarter last year and the Total Profit for quarter ended March 2012
was Rs.792.29 million grew by 12.74% from Rs.702.77 million compared to same
quarter last year.
� EPS
Due to increase in equity capital the basic EPS of the company stood at Rs. 7.04 for
the quarter ended March 2012 from Rs. 6.44 for the quarter ended March 2011.
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� Break up of Expenditure
� Segment Revenue
� Recommends Dividend
CORE Education & Technologies Ltd has recommended 30% dividend for the
financial year 2011-2012, i.e., Rs. 0.60 per Equity Share of Rs. 2/- each, subject to
approval of the Shareholders.
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Company Profile
CORE Education and Technologies Limited founded in 2003, Corporate Headquarters
at Mumbai, India and International Headquarters lies at Atlanta and London.
The company is enabling in the creation of a better future across the globe by
providing transformational and innovative solutions for the entire education
continuum of K-12, Higher education and Vocational education.
CORE is a CMMi level 3 and ISO 9001:2008 certified company achieving a CAGR of
Rs. 10,912 million ($240 million) in FY10-11.
CORE’s offerings over assessment, ICT, content, teacher training, vocational training,
examination management system, language skills and has globally impacted more
than 85,000 schools, 31 million students & trained over 105,000 teachers.
CORE has been ranked No. 1 by the Business World in 3 categories viz. Value Ranking
(Revenues between 260Cr–Rs.1000Cr), 5 year performance, Sector “IT”. CORE is
included in Forbes 200 Asia’s best under a billion companies 2010.
CORE Education and Technologies Limited is India’s largest global education company
that has presence across 12 states in India, 20states in the US, 40 LEA and
institutions in the UK, 9 African and 3 Caribbean Countries.
Product & solutions
� Assessment and Intervention
� Compliance and Reporting
� Student Information Systems and Campus Management
� Grants and Financial Management
� Professional Development and Consulting
� Government Consulting and Training
� e-Content Creation and Management
� Education Portals
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� Child Tracking System
� Vocational Training
Key Alliances
� Oxford University
� Indira Gandhi National Open University
� Center for Higher Learning – NASA
� Microsoft Gold Partner
� Gujarat Knowledge Society & DVET
� Nationteacher.org
Customer Base
CORE’s education customer base is spread across the USA, UK, Africa, Sri Lanka,
Bahamas, Caribbean and India.
In India CORE has worked for many government bodies and offered solutions for their
specific needs. Recently CORE has bagged a prestigious contract worth Rs. 295 crores
from the Haryana Government aimed at benefiting five million students in 2622
schools of which 5 schools will be developed as "Smart" schools.
Some of the key customers in the US include Los Angeles Unified School District,
Texas Education Agency (TEA), North Carolina Department of Public Instruction,
Michigan Department of Education and many such prestigious departments and
institutions. In UK, we have catered to the needs of Shropshire Local Authority, East
Riding Council, Warwickshire Council and many more.
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Financial Results
12 Months Ended Profit & Loss Account (Consolidated)
Value(Rs.in.mn) FY11 FY12 FY13E FY14E
Description 12m 12m 12m 12m
Net Sales 10912.29 16378.57 19654.28 22602.43
Other Income 155.76 258.29 294.45 323.90
Total Income 11068.05 16636.86 19948.73 22926.32
Expenditure -6976.23 -10094.86 -12166.00 -13979.60
Operating Profit 4091.82 6542.00 7782.73 8946.72
Interest -786.97 -1271.40 -1423.97 -1566.36
Gross profit 3304.85 5270.60 6358.76 7380.36
Depreciation -586.23 -989.89 -1138.37 -1274.98
Profit Before Tax 2718.62 4280.71 5220.39 6105.38
Tax -468.51 -1049.80 -1305.10 -1526.34
Profit After Tax 2250.11 3230.91 3915.29 4579.03
Minority Interest 0.00 0.00 0.00 0.00
Share of Profit & Loss of Asso 0.00 0.00 0.00 0.00
Net Profit 2250.11 3230.91 3915.29 4579.03
Equity capital 218.29 224.94 224.94 224.94
Reserves 11608.24 17683.61 21598.90 26177.94
Face value 2.00 2.00 2.00 2.00
EPS 20.62 28.73 34.81 40.71
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Quarterly Ended Profit & Loss Account (Consolidated)
Value(Rs.in.mn) 30-Sep-11 31-Dec-11 31-Mar-12 30-Jun-12E
Description 3m 3m 3m 3m
Net sales 3532.22 4772.14 4818.90 5083.94
Other income 12.69 21.29 279.68 21.93
Total Income 3544.91 4793.43 5098.58 5105.87
Expenditure -2138.27 -2866.71 -3141.07 -3131.71
Operating profit 1406.64 1926.72 1957.51 1974.16
Interest -325.47 -328.99 -355.84 -391.42
Gross profit 1081.17 1597.73 1601.67 1582.74
Depreciation -130.56 -314.63 -388.54 -400.20
Profit Before Tax 950.61 1283.10 1213.13 1182.54
Tax -201.01 -255.84 -420.84 -295.64
Profit After Tax 749.6 1027.26 792.29 886.91
Minority Interest 0.00 0.00 0.00 0.00
Share of Profit & Loss of Asso 0.00 0.00 0.00 0.00
Net Profit 749.60 1027.26 792.29 886.91
Equity capital 221.15 224.26 224.94 224.94
Face value 2.00 2.00 2.00 2.00
EPS 6.78 9.16 7.04 7.89
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Key Ratios
Particulars FY11 FY12 FY13E FY14E
EPS (Rs.) 20.62 28.73 34.81 40.71
EBITDA Margin (%) 37.50% 39.94% 39.60% 39.58%
PBT Margin (%) 24.91% 26.14% 26.56% 27.01%
PAT Margin (%) 20.62% 19.73% 19.92% 20.26%
P/E Ratio (x) 14.45 10.37 8.56 7.32
ROE (%) 19.03% 18.04% 17.94% 17.34%
ROCE (%) 31.83% 29.13% 29.57% 29.07%
Debt Equity Ratio 0.24 0.44 0.38 0.33
EV/EBITDA (x) 7.95 5.12 4.31 3.75
Book Value (Rs.) 108.36 159.23 194.04 234.75
P/BV 2.75 1.87 1.54 1.27
Charts:
Net Sales & PAT
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P/E Ratio(x)
Debt Equity Ratio
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EV/EBITDA (x)
P/BV(x)
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Outlook and Conclusion
� At the current market price of Rs.298.00, the stock is trading at 8.56 x FY13E
and 7.32 x FY14E respectively.
� Earning per share (EPS) of the company for the earnings for FY13E and FY14E
is seen at Rs.34.81 and Rs.40.71 respectively.
� Net Sales and PAT of the company are expected to grow at a CAGR of 27% and
27% over 2011 to 2014E respectively.
� On the basis of EV/EBITDA, the stock trades at 4.31 x for FY13E and 3.75 x for
FY14E.
� Price to Book Value of the stock is expected to be at 1.54 x and 1.27 x
respectively for FY13E and FY14E.
� We expect that the company will keep its growth story in the coming quarters
also. We recommend ‘BUY’ in this particular scrip with a target price of
Rs.335.00 for Medium to Long term investment.
Industry Overview
India's Information technology (IT) and information technology enabled services (ITeS)
segments are aligned in a way that the growth in one avenue has ripple effects on
another. The IT & ITeS industry, as a whole, is the mainstay of Indian technology
sector as it has driven growth of the economy in terms of employment, revenue
generation, standards of living etc and has played a major part in placing the country
on the global canvas.
National Association of Software and Services Companies (Nasscom) president Som
Mittal believes that software exports would be in tune with the estimates and are
projected to grow 15-17 per cent to generate about US$ 70 billion in 2011-12 as
against US$ 59 billion in 2010-11.
Furthermore, Internet and Mobile Association of India (IAMAI) has stated that internet
users in the country have crossed the 100-million mark (owing to increasing internet
penetration and affordability for personal computers (PCs), of which 17 million are
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online shoppers. It estimates that the number of Internet users in India will triple by
2015.
Rural India Calling
Rural business process outsourcing (BPO) units account for over US$ 10 million
towards India's IT-BPO revenues. Many big IT-BPO companies in India are getting
attracted towards hinterlands due to availability of immense untapped talent and
lower costs. Attrition rates in rural areas are just about 3-5 per cent as against a high
of 50 per cent in urban BPOs. Employee costs in rural BPOs is almost half as against
that of urban BPOs which bring overall operational costs down by almost 30-40 per
cent for IT companies. Nasscom has further stated that employee base in these areas
would expand by over 10 times by 2013-14 from 5000 in 2009-10.
Wipro BPO, the BPO arm of Wipro Technologies had launched its first rural BPO
centre at Manjakkudi Village in Tamil Nadu in August 2011. In October 2011, Infosys
BPO had inked an agreement with the Government of Andhra Pradesh to open rural
BPO centers in 22 districts. Rural Shores is another firm that had opened a BPO
centre in Bagepalli district of Karnataka and serves over 20 clients including HDFC,
Infosys, Wipro Technologies and Genpact. It aims to recruit more than 10, 000 youth
by 2014.
IT & ITeS - Key Developments and Investments
Between April 2000 and November 2011, the computer software and hardware sector
received cumulative foreign direct investment (FDI) of US$ 10.93 billion, according to
the Department of Industrial Policy and Promotion (DIPP).
• Network equipment maker Cisco Systems Inc.'s Indian unit is vying for a bigger
share of the IT spending by small and medium enterprises (SMEs) in 14 non-
metro markets. The company is planning to increase the amount of investments
on its distribution network in the smaller cities in 2012. It has also intensified
its research activities in order to develop India-specific products that in some
cases may cost just 20 per cent of the global product.
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• California-based IT services company UST Global is expanding its footprints in
India's IT capital Bengaluru. The company already operates in
Thiruvananthapuram and Kochi in Kerala. In Thiruvananthapuram also, the
company is building a 3 million sq ft campus which would be a major hub for
offshore IT services offered by the company.
Online Retailing on a High
Emergence of internet retailing and e-commerce as a completely new space is driving
the growth of number of online shoppers. As a result, the internet retailing companies
are getting attracted towards Indian markets which are poised to grow leaps-and-
bounds in the years to come. There are about 17 million online shoppers in India and
the number is projected to grow over three times in the years to come.
• Seattle-based world's largest internet retailer Amazon.com has recently
launched its website Junglee.com with a view to harness burgeoning online
shopping market in India which is expected to triple in size by 2015.
Junglee.com has partnered with several Indian online and offline retailers like
HomeShop18, Hidesign, Dabur Uveda, the Bombay Store and others. It has also
formed alliances with online players like Snapdeal, Univercell, Saholic (a Spice
Group firm) and Fommy.co.in.
• India's largest and most-funded e-commerce company Flipkart Online Services
Pvt. Ltd has acquired Letsbuy.com, the country's second-largest online
electronics retailer, for an undisclosed amount. The move reflects Flipkart's
strategy of becoming a major player through acquisitions and eventually
grabbing a substantial pie of ever- increasing Indian online retailing space.
Cloud Computing – The Emerging Technology
Cloud computing is a set of services that provide infrastructure resources using
internet media and data storage on a third party server, that is, the subscriber (of
cloud service) does not need to own the infrastructure, which saves him from entailing
any capital expenditure and he pays to the service provider as per his usage.
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The concept is on a high rage in India these days. The cloud solutions industry in
India is around US$ 400 million currently and by 2015 it is poised to grow 10 times to
US$ 4-4.5 billion. This further enhances the fact that Indian market is the most
mature when it comes to adoption of cloud technologies and has the highest usage
levels of converged systems.
• The state of Gujarat has over 10 per cent of 3 million small and medium
enterprises (SMEs) present in India. Hitachi Data Systems is ready to launch its
cloud services for the SMEs in Gujarat as they are searching for data backup
and email management services along with data and business analysis by cloud
solutions providers.
• Videocon and AEC Partners will jointly invest US$ 21 million in a cloud-
computing start-up called Nivio. The US$ 100 million-cloud computing
company will use these funds to expand its engineering centre in Palo Alto,
California and recruit fresh talent. AEC Partners is a US-based private equity
(PE) firm that holds expertise in technology investments.
Government Initiatives
Industry experts believe that increase in Government spends over e-governance
projects would be a major driver of growth for Indian IT/ITeS space. Nasscom has
stated that infrastructure for spends is ready and now is time when National e-
Governance Plan (NeGP) should be executed in full force. NeGP aims to create the right
governance and institutional mechanisms, set up the core infrastructure and policies
and implement various Mission Mode Projects across the Centre, state and integrated
service levels to create a citizen-oriented and business-centric environment for
governance.
Meanwhile, the Government has recently announced that it would buy some 100,000
low-cost Aakash tablets from Datawind (the Canadian company that has developed
this device) and would distribute them to students in schools and colleges for free. The
move comes as an effort to facilitate e-learning.
In another similar effort, IT major Intel India had joined hands with the Karnataka
Government's Sarva Shiksha Abhiyan in 2011 and had launched ‘Computers on
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Wheels'. It was a pilot e-learning program that entailed digital instruction materials
from reputed education solutions provider 'Educomp'. The program focussed to equip
teachers with learning techniques and tools and deliver diverse learning styles and
abilities to students, making education more participative rather than passive.
The Government of India has also undertaken a project that aims to provide high
quality broadband access to village Panchayats through National Optical fibre network
by 2014. The process is in progress and is projected to be very beneficial, especially for
the SMEs.
Software giant Infosys is planning to expand its footprint in India with focus on Tier-II
cities. The company has recently inked an agreement with Government of Madhya
Pradesh for setting up a development centre in Indore and is awaiting response from
Government of West Bengal for setting up a centre in Kolkata as well.
All such developments and initiatives on part of the Government of India reflect the
fact that the supreme administration is making all the possible efforts to boost the
country's IT and ITeS industries.
IT & ITeS in India - Road Ahead
There are many predictions and forecasts pertaining to IT & ITeS in India across
various segments.
For instance, a study by management advisory firm Zinnov states that IT adoption in
Indian SME segment is growing at a rate of 15 per cent and would touch US$ 15
billion by 2015. The study noted that as of now, only 20 per cent of the total 50 million
SMEs in India are technology-ready today which poses an immense scope for further
growth.
Another study by consulting and advisory services firm CyberMedia Research suggests
that the PC market in India would have witnessed sales of 11.15 million units in the
2011 calendar year which would further accelerate by 14 per cent to 12.71 million
units in 2012.
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Internet retailing is also emerging as an entirely new avenue to be explored. According
to estimates made by an industrial body, India's online retail industry is anticipated to
surge to Rs 70 billion (US$ 1.43 billion) by 2015 from Rs 20 billion (US$ 405.93
million) as broadband is becoming increasingly accessible and internet penetration is
increasing. Another report by Avendus Capital Pvt. Ltd states that e-tailing would
become a Rs 53,000 crore (US$ 10.76 billion) market by 2015 from the current Rs
3,600 crore (US$ 731 million).
______________ ____ _________________________ Disclaimer:
This document prepared by our research analysts does not constitute an offer or solicitation
for the purchase or sale of any financial instrument or as an official confirmation of any
transaction. The information contained herein is from publicly available data or other
sources believed to be reliable but do not represent that it is accurate or complete and it
should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s
affiliates shall not be in any way responsible for any loss or damage that may arise to any
person from any inadvertent error in the information contained in this report. This document
is provide for assistance only and is not intended to be and must not alone be taken as the
basis for an investment decision.
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