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Sunday, December 28, 2008

EDUCOMP SOLUTIONS - Buy Stock To Have Education Sector Pie

Educomp Solutions Limited , founded in 1994 is a globally diversified education solutions provider and the largest education company in India. Educomp group serves over 19,000 schools and 9.4 million learners and educators across the world.

Reco price: Rs 2,804
Current market price: Rs 2,409
Target Price: Rs 3,550
Upside: 47.3%
Brokerage: KR Choksey Shares and Securities


During the quarter, Educomp Solutions added 231 schools under its Smart class program, wherein real-time media digital content is provided to a teacher in the classroom. The total number of schools under this program has now reached 1,267. Similarly, the instructional and computing technology (ICT) segment, which provides educational infrastructure in government schools, has seen similar traction in numbers.

With the addition of 1,626 schools during the quarter, the total number of ICT schools has reached 8,915, spread across 14 states. Educomp acquired 50 per cent stake in Eurokids International during the quarter for Rs 39 crore. Eurokids operates more than 400 pre-schools across India and has been in the business for more than seven years. This acquisition enhances Educomp’s portfolio of services and will help in becoming an end-to-end provider of services across the education spectrum.

Educomp has presence in the Millennium school business (brick and mortar owned schools) and increased the number of schools to 11. The company has procured a line of credit and debentures of Rs 725 crore from Axis Bank towards financing the capex in this business. The company also acquired 51 per cent stake in Takshila Management Services, which has expertise in setting up schools in Tier III cities. Post this acquisition, Educomp is now in the process of setting up schools in three cities, which are expected to be ready by June 2009. Maintain buy.

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