MT Educare

Better recognized as Mahesh Tutorials, the stock yesterday hit a new 52-week high at Rs.137.30 and this was after the company stated that it had bought a 51% stake in a leading IIT, engineering and medical entrance teaching institute – Lakshya Forum for Competitions, with an option to increase its stake to 100% stake in Lakshya by 30 June 2018. Lakshya has a strong northern Indian presence and this will help MT Educare to better its own reach which is recognized mainly as a ‘Mumbai’ coaching class.  

For Q2FY13, the company managed its operating expenses well which as a percentage of net revenue at 76% was much lower than 94% in Q1FY13. This in turn helped shore the consolidated net profit, which at Rs.9 crore was up over 3.5 times Q1FY13 net profit, this on a 24% rise in net revenue. The company had gone public in March 2012 and had raised Rs.35 crore. Till end of Q2FY13, it has utilised Rs.18 crore. It had issued shares at Rs.80/share and remains comfortably well above the price. Its H1FY13 EPS at Rs.2.93 discounts the current price by over 45 times, much above a more established similar company, Career Point, whose H1FY13 EPS at Rs.6.01 gives a PE of around 32 times. Clearly, MT is way ahead of its fundamentals for at current price.