Fairwealth Research Desk initiated a Buy on Educomp Solution Ltd at Rs 580(adj.). Target of Rs. 760 has been achieved. We re-rate the stock as Hold with a target price of Rs 685.

The top-line of the company appreciated 48.65% YoY to Rs 273.37cr (in line with our expectations of Rs 264cr).

The bottom line performance of the company was marginally below our research estimations, to Rs 67.52cr. (as against our expectations of Rs. 72 crore)

The EBITDA expanded by 33.27% to Rs 160.08. cr and there was a 23.85% YoY increase in the net profit to Rs 67.52cr. A good revenue growth can be attributed to School Learning Solutions segment which grew by more than 60% Y-O-Y and accounts for 98% of the total revenues of the company.

Educomp Solutions Ltd, formerly known as Educomp Datamatics Limited, was incorporated in 1994 and is based in New Delhi, India. It is India's largest educational service provider with foremost emphasis on the K-12 space. Educomp group serves over 19,000 schools, 9.4 million learners and educators across the world. Company operates private schools across various cities and has also collaborated with various state governments.

It has 27 offices worldwide. In addition, the Company operates through its various subsidiaries including author GEN, Three brix eServices, Learning. com, USA, AsknLearn Pte Ltd, Singapore and via its associates such as Savvica in Canada.

During the quarter ended 31st March 2010, the company’s top line increased 48.65% to Rs. 273.37 crore on Y-O-Y basis as against Rs. 183.9 crore in the corresponding period last year it increased by 34.08% from Rs. 203.88 cr. on a Q-O-Q basis. The bottom line surged 23.84% on Y-O-Y basis to Rs. 67.52 crore as compared to Rs. 54.52 crore in the corresponding period last year and surged 5.29% from Rs. 64.13 cr. on Q-O-Q basis. The company has EPS of Rs. 7.1 in this quarter.

During FY2010, the net sales of the company reported an increment of 66.04% on y-o-y basis to Rs 832cr as against Rs 501cr during the comparable period last year. The impressive top-line performance of the company was largely contributed by School Learning Solutions segment which grew by 86.3%.

The operating profit for FY10 increased by a massive 71.3% to Rs 494.3cr as against Rs 287.6cr, largely on account of increased income of the company and improved margins. Net profit for the year rose by an impressive 65.93% to Rs 218.33cr as against Rs 131.58cr during the previous year which surpassess our expectations. The company has EPS of Rs. 23.61 on TTM Basis.