S. Chand Q4 FY26: Strong season finish, net cash balance, and a bigger bet on AI dataset licensing

S. Chand and Company Limited closed FY26 with its strongest operating revenue in the company’s history. Consolidated revenue from operations rose 11% year on year to INR 7,987 million, supported by a strong peak season in Q4. For Q4 FY26, revenue increased 16% year on year to INR 5,478 million. Profitability also improved, with FY26 EBITDA of INR 1,449 million and PAT of INR 731 million, while Q4 FY26 PAT reached INR 1,695 million.

The company’s messaging in both the investor presentation and the earnings call stayed consistent: the core K-12 publishing business delivered a steady season, working capital was managed but saw a temporary year-end spike, and two growth vectors are being pushed harder into FY27. The first is the syllabus refresh cycle under NCF and the expected CBSE curriculum rollout for Classes 9-12. The second is digital content licensing, especially AI dataset licensing, which is now a visible revenue line with management giving an explicit FY27 target.

FY26 results: revenue growth with resilient margins

S. Chand reported gross margin of 67.9% in FY26, which management described as resilient despite a 6% GST hike on paper. EBITDA margin for FY26 stood at 18.1%, within the stated guidance band of 18% to 20%. In Q4 FY26, EBITDA margin was much higher at 44.9%, reflecting the company’s well-known seasonality.

A practical way to read these numbers is through the company’s seasonality slide. S. Chand says 70% to 80% of annual revenues are typically booked in Q4, when K-12 school deliveries peak and receivables build up. That puts disproportionate weight on Q4 execution quality, and FY26’s Q4 prints were strong across revenue, EBITDA, operating income and PAT.

The operating cash flow decline in FY26 to INR 747 million from INR 999 million in FY25 was explained as a timing and working capital issue rather than a profitability issue. Management said collections of over INR 160 to 165 million from content licensing shifted from Q4 to Q1, and that collections in the Middle East were delayed due to ongoing conflict.

Working capital: year-end spike, management expects normalization

The company ended FY26 with trade receivables of INR 3,503 million and inventory of INR 1,634 million. In terms of days, receivable days rose to 160 (from 140) and net working capital days increased to 164 (from 151). Inventory days were stated at 232 versus 223 in the prior year.

S. Chand acknowledged the spike clearly and gave concrete reasons: timing shifts in digital licensing collections, delayed Middle East collections, and higher finished goods inventory due to NCF rollout, as the company carried both old and new syllabus inventory. Management expects receivables and working capital days to normalize within the first half of FY27.

Despite the working capital build, the balance sheet remains a key comfort point for management. The company ended March 2026 with a net cash position of INR 1,048 million, even after capex and the CPD Singapore acquisition outgo during the year.

Digital and AI dataset licensing: now a stated growth pillar

The most incremental business update in FY26 is the growth in digital revenues. The investor presentation reported digital revenues of INR 318 million in FY26, up 62% year on year from INR 195 million.

On the earnings call, management described AI dataset licensing as a mix of one-time and term-based licenses, and said FY26 revenue mix was about 30% one-time and 70% term licenses, with varying license durations. They also noted that while three of the five clients were perpetual licenses, the period licenses accounted for most of the revenues.

Two operational points matter here. First, the company said margins are much higher when its own content is licensed. Second, in FY26 a larger proportion of licensing activity involved sourced third-party content compared to FY25, which reduced margins within this stream even as revenue grew. Management did not disclose specific margins due to confidentiality clauses but indicated that in-house content licensing can carry very high contribution.

For FY27, management has set a clear target: content licensing revenue in excess of INR 400 million. Longer-term, they indicated an aspiration to scale this business toward around INR 1,000 million, though they were candid that forecasting beyond near-term is difficult because client budgets and the type of content requested vary significantly.

NCF and syllabus refresh: a multi-year adoption cycle

Management’s growth optimism is also tied to curriculum changes. The company highlighted that new syllabus books for K-8 have already been released, and referenced a CBSE circular from April 2026 indicating that the new curriculum for Classes 9-12 would be launched in the next few months.

The implication, as management framed it, is that FY27 and FY28 should see wider adoption of new syllabus books across K-12, supporting growth over the next two years.

Alongside syllabus change readiness, S. Chand showcased traction for its own curriculum programs. The investor presentation stated that the refreshed mylestone curriculum has been adopted by over 650 schools. For ZEN, the company shared a timeline from inception in June 2024 to a second season reaching 450 plus schools by March 2026.

CPD Singapore acquisition: early-stage entry into international curriculum

S. Chand completed its first international acquisition in January 2026 by acquiring CPD Singapore. Management positioned the acquisition as filling a portfolio gap: supplementary books aligned to Singapore curriculum, IGCSE and IB for K-12.

Importantly, management also set expectations that CPD is not yet an India growth engine. On the call, they stated CPD’s sales are largely concentrated in Singapore, with some presence in Malaysia and Indonesia, and no India sales as of now. CPD’s last year revenue was stated at around USD 0.5 million, approximately INR 50 to 60 million, with a December year-end. Management said it would take one to two years to establish the business in India and provide clearer visibility, and that scaling could be a three to four year journey.

FY27 outlook: growth guidance with margin caution

The FY27 guidance is straightforward and numerically anchored.

The company expects operating revenue growth of 10% to 15% in FY27, excluding acquisitions. EBITDA margin guidance is 17% to 19%, slightly lower than FY26, driven by expected increases in paper and other input costs, logistics and packaging costs, and inflation-linked employee cost pressure. Management said they expect paper prices to rise 10% to 15% and may take price increases of around 6% to 8%, but cannot raise pricing aggressively due to affordability and market pushback.

On cash flows, management stated an intention to deliver operating cash flow of over INR 1,000 million in FY27, and mentioned a capex plan of about INR 200 million, largely toward a new state-of-the-art printing plant near Delhi. Over time, the company linked this investment to productivity and potential working capital gains, especially if print-on-demand capability allows smaller print runs and lower inventory holding.

Key takeaways

S. Chand’s FY26 narrative is one of steady execution in a seasonal business. Revenue and profits improved, gross margins held firm despite a paper tax shock, and the company maintained a net cash position. The near-term items to track are working capital normalization in H1 FY27 and how effectively the company converts the FY27 syllabus refresh tailwinds into sustainable market share gains.

At the same time, the digital business has become more than a side story. With a stated FY27 target of INR 400 million plus in content licensing, AI dataset monetization is now being positioned as a meaningful second engine, even if revenue visibility depends on client budgets and contract structure. CPD Singapore adds a longer-duration option on international curriculum, but management itself is indicating that it will take time to translate into India-scale revenues.

For FY27, the company is guiding for growth while cautioning on costs, which sets up a familiar trade-off: how much pricing power and efficiency can offset paper and logistics inflation. Investors will likely judge execution by two metrics: delivery on the 10% to 15% revenue growth band, and whether receivables and inventory revert toward normalized levels as management expects.