Morgans first take on the acquisition of 100% of the British Council’s Indian IELTs operations for $238m, results in 10-13% upgrades to the broker’s EPS forecasts for FY22 and FY23. The Add rating is retained and the price target is increased to $29.10 from $28.48.
Management expects synergies of $6-8m within 24 months and estimates EPS accretion of around 13%, based on pro-forma 2019 (pre synergies). The analyst sees the acquisition as highly strategic and provides enhanced exposure to a large and growing IELTs region.
Longer-term, Morgans continues to see sustained strong growth driven by market share gains in student placement, ongoing IELTs demand and potential further acquisition opportunities.
Sector: Consumer Services.
Target price is $29.10.Current Price is $24.47. Difference: $4.63 – (brackets indicate current price is over target). If IEL meets the Morgans target it will return approximately 16% (excluding dividends, fees and charges – negative figures indicate an expected loss).
