Tree House Education & Accessories Ltd (THEAL) is India’s one of the largest pre-school operator, with strong position in Tier 2 cities. THEAL has a dominant position in Maharashtra with 257 pre-schools, which is 40 per cent of its total 612 pre-schools. In FY16E, the company is planning to open 150 pre-schools out of which 100 pre-schools will be opened in Delhi and National Capital Region (NCR) and Tier 1 cities which will strengthen its position in the pre-school industry. Remaining 50 pre-schools will be opened in Tier 2 & 3 cities.
THEAL has 190 day care centres in operation and is planning to expand going forward. THEAL has placed a good strategy with respect to the business of day care services for which it has entered into tie-ups with corporate employers in IT, ITS, banking and consulting sectors to provide services for their employees.
THEAL has consistent operating profit margins and aggressive expansion plans in self-operated pre-schools, which makes them one of the largest player in the industry. We expect the company will be debt-free by FY17E and RoE is expected to be at 14.3 per cent in FY17E compared with 11.8 per cent in FY14.
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