https://www.bloombergquint.com/markets/2017/03/20/career-launchers-parent-cl-educate-takes-its-market-test
I AM NOT APPLYING THIS IPO I DO NOT FIND VAULE AT THESE PRICE. LISTING GAIN IS POSSIBLE ON SPECULATION AND MARKT PRESENT CONDITION BUT FUNDAMENTAL IT IS AVOID. THE CHANCE OF LOSS IS MORE THEN EXPECTED GAIN
INVESTING ALL ABOUT INVESTING WISELY THEN BLINDLY SO AVOID
All You Need To Know About CL Educate’s IPO
Soumeet Sarkar
Bloomberg
Bloomberg | Quint is a multiplatform, Indian business and financial news company. We combine Bloomberg’s global leadership in business and financial news and data, with Quintillion Media’s deep expertise in the Indian market and digital news delivery, to provide high quality business news, insights and trends for India’s sophisticated audiences.
Company
Financial Products
Enterprise Products
Customer Support
Americas
+1 212 318 2000
Europe, Middle East, & Africa
+44 20 7330 7500
Asia Pacific
+65 6212 1000
March 20, 2017, 6:25 pm March 20, 2017, 11:48 am
CL Educate Ltd., parent of coaching services provider Career Launcher, launched its initial public offering (IPO) on March 20 to raise Rs 239 crore at a valuation of Rs 711 crore. It’s the year’s fourth IPO after BSE Ltd., Music Broadcast Ltd. and Avenue Supermarts Ltd. Priced at Rs 500-502 apiece, the IPO closes on March 22. Here’s a snapshot of the offer and the company.
How Is The Offer Structured?
CL Educate Ltd. plans to issue 2.18 million fresh shares to raise Rs 109 crore, while the promoters and other investors will sell around 2.58 million shares worth around Rs 130 crore at the upper end of the price band.
Why Is It Raising Funds?
The company will use money raised from the fresh issuance to meet working capital requirement, pare debt and fund acquisitions.
What’s In It For Shareholders?
Ten promoters and 29 other shareholders will sell 18.22 percent of the post-issue equity share capital. Investor Gaja Trustee is looking to sell shares at a premium of 49 percent, Edelweiss Finance & Investments at 20 percent and GPE (India) at a 17 percent premium. While Edelweiss Finance will exit the company, Gaja will retain 1.8 percent and GPE 6.7 percent.
What Is The Company’s Business?
CL Educate started in 1996 by offering management test-preparation courses and later diversified into coaching for medical, engineering and civil services, among others, under its Career Launcher brand. The company also runs K-12 (kindergarten to 12th standard) Indus World schools, offers vocational training and provides publishing services under GK Publications. The firm also offers recruitment, training, and event management services to corporate houses through its unit Kestone.
What’s Its Revenue Source?
The company generates most of its revenue from test preparation classes and recruitment and training services provided to corporate houses.
CL Educate will sell its K-12 schools, which contribute 2 percent to the top line, to a third party for Rs 85 crore. It is looking to strengthen its test preparation business by acquiring ETEN, a division of coaching services provider IndiaCan Education Pvt. Ltd., for Rs 6 crore.
Who Are Its Rivals?
Coaching is a largely informal and unregulated segment of the education sector. CL Educate competes with unlisted players like TIME, JK Shah Classes and IMS that have pan-India presence. It’s listed competitors include MT Educare and Career Point.
At the upper end of the Rs 500-502 price band, CL Educate’s earnings per share (EPS) after issuing new shares will stand at Rs 15.3 for financial year 2015-16 and price-earnings ratio at 32.8 times, according to BloombergQuint’s calculations. CL Educate is expected to trade at a higher forward price-to-earnings ratio than its peers.
Promoters’ Shareholding
The shareholding of two of its co-founders Satya Narayanan R and Gautam Puri, who own nearly 43 percent, will come down to a little over 33 percent after the offer. The overall promoter holding will close to 65 percent.
Brokerage Verdict
Angel Broking, Indian broking firm, has a ‘neutral’ rating on the back of its expensive valuations.
Compared to its peers the margins and ROE profile of CLEL does not appear to be attractive. The company’s business is working capital intensive which coupled with expensive valuations may not provide a significant upside to the investor.
Zerodha (Trading & Demat Account)
RHP
Top Contributor (400+ Posts, 300+ Likes)
IPO Guru (2500+ Posts, 2700+ Likes)
