EDSL Trading Buy Target :290

EDUCOMP Trading Buy Target :290

Ø At US$600bn, yearly education spend in India is larger than that of the US at comparable prices. It is 9^th highest and one the of the fastest growing in the world. India’s yearly growth in education spend is at 15%. Private education revenue growing 19%. From US$30bn in 2012, private education revenue is set to reach US$45bn by 2015.

Ø Educomp (EDSL) is the only player in India offering end-to-end services in the education sector. Educomp recently unveiled a new smartclass programme, which will provide teachers tools to make teaching more interactive. The company, which already provides education solutions to 19,000 schools in the country, will upgrade these to the new platform free of change. Of this, 8,100 are private schools, while the remaining 11,500 are government schools. "Smartclass CTS provides a glimpse into the classrooms of the future. Since it uses more of graphics and demonstration, it will help students learn faster and also understand and remember better the concepts taught in the classroom.

Ø Technically For the last couple of months EDSL was in a very narrow tight trading range. Normally good stocks when they go into a narrow range are eventually going to breakout and that’s what has happened with EDSL. Yesterday Stock traded with highest volume in last two months and has given a break out on the charts also after a long period of consolidation, triggering a Buy on our systems. (see the chart attached)

Ø RSI oscillator on daily chart is also on rising mode that makes upside momentum reliable.

Ø Looking at the futures activity, EDSL stock has Open Interest of 2.5mln shares i.e. only 38% from the peak of 6.7 mln shares. According to us stock can witness a renewed buying interest which will lead the stock price rise up to 290.

Ø We feel the worst is over for the company and the 'Class Transformation System' will of course improve the financial visibility of the company in coming qtr’s on the fundamental side.

Ø Educomp is also targeting 40,000 new classrooms. In the first half of the fiscal, EDSL has already opened 13,000 new classrooms and is confident about meeting the target of 40,000 by March 2012.

Ø We Would Suggest Going Long On EDSL at CMP: 235 with stop loss of 220 with a short term Target of 290 (i.e.23% Upside.)