Tree House Education and Accessories Ltd (THEAL) is the largest self-operated
pre-school education provider in India. THEAL has 349 pre-school centres of which 278 centers are self-owned schools (SOS) while 71 centers are franchisees (as of December 2012). THEAL has also entered into the K-12 schools segment (in regions where it has strong pre-school presence) which is a logical extension from its existing pre-school business. THEAL has advantage over other players since it has feeders from its pre-school segment. It offers school management services to K-12 schools through a trust and currently has 23 operational schools under this arrangement. With rising need for quality education and changing lifestyles, THEAL is expected to grow at a robust pace with its established brand. We initiate coverage on THEAL and recommend Buy with a target price of Rs275.

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