For more than a month now, the share price of CL Educate (BSE: 540403, NSE: CLEDUCATE), has traded around Rs 55 levels, somewhat insulated against the global market turmoil. At this levels, the stock is down 15% on a y-o-y basis.
CL Educate stock was last seen at these levels in the middle of May 2022, when it was quoting at around Rs 110 (a 1:1 bonus was given out in Dec’22). This was also the time the management had announced a buyback worth Rs 10 crore, that targeted reducing paid up capital by around 3.5%. The buyback was an open market buyback, upto a price of Rs 170 (Rs 85 in post bonus terms).
For the last one month, the share price has held at the same levels. In the period since the buyback, CL’s fundamentals have improved both on the Balance Sheet and P&L front.
At the time the buyback was announced, CL had a net cash of around Rs 50 crore. As of Dec’22, the net cash position, after having concluding the buyback, had risen to around 90 crore. It is expected to grow on a secular basis, since CL’s asset light business model does not require significant investment. The company expects to continue generating free cash from operations.
The P&L performance has been good in FY23, with growth having returned. On a TTM basis, net revenue is up 32% over FY22 revenue, and net profit is up 84%. Recovery from covid-impact is a key driver, and this affect will gradually peter out, however, CL has growth drivers in place for continued growth as well.
As we have pointed out earlier, at this price, there is low downside risk. Net cash is now around 30% of market cap and expected to rise. For investors, having a view on continued growth prospects of CL Educate will be a key factor.