Wrong time to invest in CORE Education, say experts

Though CORE Education & Technologies lost 80 per cent of its market capitalisation and valuations look attractive, experts advise investors to exercise caution till clarity emerges on the company.

The company has a good financial record and dividend payment history. At the current price, the stock is trading at two times its FY12 earnings of Rs 28.7 which looks attractive. The company's current market capitalisation is Rs 680 crore which is low, relative to its sales turnover of Rs 1,750 crore and net worth (shareholders fund) of Rs 1,800 crore in FY12.

Experts are skeptical about retail investors making fresh investments, given the uncertainty about the development. They also say many companies in the past have suffered due to the selling of pledged shares and their share prices continue to trade lower, despite clarifications. Experts also fear about corporate governance issues or a possibly bigger crash in stock price. "In the past, the company had been facing corporate governance issues and since 2008, its share prices have fallen significantly almost three times and recovered. If it is operators' stock which are being sold in the market by the financiers, the recovery in share price is going to be difficult," said market expert Ambareesh Baliga.

CORE does not have much debt and cash flows have been decent. In this backdrop, experts suggest small investors stay away, at least till clarity emerges.

"It is difficult to take a call on valuations, I would not say investors should touch all these kind of companies. Even through the prices have fallen, there are no hard assets or say factories that can provide the support or some confidence in terms of valuations. The company is in the service business and then too, a large part of revenue comes from the overseas markets," said SP Tulsian.