Stock Review: Core Projects and Technologies

 

Co Has Chalked Out Plans To Expand Its Footprint India, Southeast Asia And Africa

 

THE stock of education solutions provider Core Projects and Technologies has outperformed the broader market in the past one year. It has gained over 50% during the period against a 19% gain in the benchmark Sensex.

   Present across three continents, Core Projects is a technology-enabled educational solutions provider to governments, universities, schools and students. The service offerings span across all stages of education including school, higher education and vocational training.

   In order to expand its market reach and product offerings globally, Core has acquired nine companies in the UK and the US in the past five years. The company is planning to buy another company in the UK in next two months.

   As much as 95% of the company's total revenue comes from the UK and the US. It has chalked out plans to expand its footprint in the emerging markets such as India, Southeast Asia and Africa. To expand its product offerings, the company has entered into strategic alliances with other established players in the education space including Microsoft, Oxford University and Center for Higher Learning – NASA.

   Core is also keen on increasing its India revenue from a minuscule to over 25% of its total revenue by FY13. To achieve this, it has aligned with Oxford University, IBM and Indira Gandhi National Open University (IGNOU).

   It has recently signed a 119-crore pact with the Maharashtra government spread over a period of five years. In the next two years, the company expects to sign two more similar contracts with other states. Core's primary focus is on the government-funded education business and it intends to operate in the same space going ahead. Moreover, the company plans to further enhance its services through teachers' training and vocational training modules.

   At the current market price of 307.4, the stock trades at nearly 17.7 times its earnings for the trailing 12 months. The company has witnessed a slowdown in its sales and profit growth in the June 2010 quarter. The management has attributed this to the lumpy nature of its revenue and mark-to-market adjustment on its foreign borrowings. The company is likely to continue its double-digit growth in the coming quarters given the project visibility.