S Chand Navigates Q2 FY26 with Strategic Focus and Strong Working Capital

S Chand And Company Limited, a prominent player in India's education content sector, has reported its financial performance for the second quarter and first half of fiscal year 2026. Despite Q2 typically being the smallest quarter in terms of revenue, the company demonstrated resilience and strategic agility. For Q2 FY26, S Chand recorded consolidated revenues of 49.3 Crore, marking a notable 32% year-on-year increase. The first half of the fiscal year (H1 FY26) saw consolidated revenues reach 152.0 Crore, reflecting a 3% growth compared to the previous year. While the company reported an EBITDA Loss of 60.1 Crore and a PAT Loss of 53.6 Crore for Q2 FY26, and an EBITDA Loss of 69.3 Crore and PAT Loss of 67.7 Crore for H1 FY26, management emphasized the seasonal nature of their business, with Q2 being a lean period.

The company's performance in H1 FY26 was influenced by a strategic shift in its content licensing (AI Datasets) revenues. As guided in Q1, there was an increased billing in this segment during Q2, contributing to the overall revenue. For H1 FY26, AI Datasets generated 14.2 Crore in revenue, representing approximately 9.34% of the total revenue from operations. The remaining 137.8 Crore, or 90.66%, came from traditional publishing, encompassing school and higher education segments. This shift in revenue mix, particularly the increased reliance on third-party content for AI Datasets, led to a reduction in gross margins percentage during H1 FY26, as third-party content typically carries lower margins compared to in-house content.

Operational Excellence and Financial Health

One of the standout features of S Chand's Q2 FY26 results is its unwavering focus on working capital management. The company continued its journey of improvement, delivering some of the lowest working capital metrics in its history for Q2. S Chand proudly announced its net debt-free status, ending the quarter with a net cash balance of 23.5 Crore, a significant improvement from 9.3 Crore in Q2 FY25. Management expressed confidence in maintaining this net debt-free position for three quarters in FY26. The company's inventory days stood at 237 days, and net working capital days were 123 days, both representing the lowest Q2 figures in the past five years. This disciplined approach to capital allocation and operational efficiency underscores a robust financial foundation.

S Chand also highlighted its strong competitive position within the industry. Benchmarking against leading comparable pan-India publishing players, S Chand Group emerged as the largest industry player in its segment. Furthermore, the company demonstrated the best EBITDA Margin and PAT generation among its peers, reinforcing its operational effectiveness and profitability despite the challenging market dynamics and increased expenses.

Strategic Initiatives and Future Outlook

Looking ahead, S Chand is strategically positioned to capitalize on key industry trends and opportunities. The company anticipates maximum adoption of the new NCERT syllabus books for Classes K-12 by FY27, which is expected to significantly contribute to its growth trajectory. While the NCERT curriculum is being launched in a staggered manner, causing some initial market confusion, S Chand is fully equipped to leverage this opportunity over the next two sales seasons, with benefits expected to materialize from next year onwards.

In a significant move towards inorganic growth, S Chand has finalized an acquisition in the international curriculum space, specifically targeting the IB syllabus. This acquisition, valued at approximately US$1.5 million, is expected to be completed in Q3 and will open a new vertical for the company, addressing a fast-growing segment of international schools in India, the Middle East, and other South Asian countries. The company is also evaluating other inorganic opportunities to enhance its product portfolio and fill strategic gaps in areas such as school regional segments, non-core textbooks, test preparation, and computer sciences.

S Chand is also focusing on the CUET Examination segment through its TestCoach platform, aligning with its digital initiatives that continue to show higher adoptions and enrolments. The content licensing (AI Datasets) business remains a key area, with the company working to make it a steady revenue stream by increasing its customer base and leveraging its extensive repository of quality, verified, and copyrighted data for evolving AI LLMs. Management guidance for FY26 includes operating revenues crossing 800 Crore and an EBITDA margin band upgrade to 18%-20%. The company's proactive approach to market shifts, disciplined financial management, and strategic expansions underscore its commitment to sustained growth and value creation for its stakeholders.