Coaching services provider Veranda Learning Solutions’ ₹200 crore initial public offering (IPO) opened for subscription on March 29. The IPO closes on March 31 and has a price band of ₹130-137 per share.
The issue comprises only of fresh issuance of shares worth ₹200 crore and no offer for sale. The firm offers online and offline coaching services on UPSE, banking, government services and jobs examinations and is only the second IPO to open in March 2022.
Key things about the issue
Investors can bid for shares in multiples of 100 under the Veranda Learning IPO. At the upper end of the price band, one lot of shares will cost investors ₹13,700.
As per the red herring prospectus, up to 75 percent of the total offer is reserved for qualified institutional buyers (QIBs), 15 percent for non-institutional bidders (NIIs), and the remaining 10 percent for retail investors.
The objective of the IPO is to repay or pre-pay, in part or full of all or certain borrowings up to ₹60 crore, it said in its draft papers. The firm added that it will use ₹25.19 crore towards payment of acquisition of Edureka and about ₹50 crore towards growth initiatives.
Here's what brokerages make of the issue
Most brokerages recommend avoiding the issue due to weak financials and fundamentals of the firm.
Hem recommends avoiding the issue looking at the company's financials and valuation. However, it added that the company’s business model is technology-driven, asset-light and scalable with a proven track record of promoters.
Choice Broking also has an 'avoid' rating on the issue. "K-12 education is over 40 percent of the total edtech market in India. This is followed by test preparation and online certification. Veranda Learning has a presence in the test preparation market and intends to have services for the K-12 segment in the future," Choice Broking said in a report.
"Having commenced its operations in December 2020, the company is in a growth phase. Currently, it is loss-making and is forecast to remain so in the medium term," it added.
Meanwhile, Religare Securities said that while the company has strong promoter experience and a result-oriented method of teaching with a 360-degree approach; the financial performance of the company is weak as it is consistently incurring losses. It is also not bullish on the issue.
About the firm
Veranda Learning Solutions Limited was incorporated on November 20, 2018. Veranda is engaged in the business of offering diversified and integrated learning solutions in online, offline hybrid and offline blended formats to students, aspirants, and graduates, professionals and corporate employees enrolled with their courses through a multitude of career-defining competitive exams, professional courses, exam-oriented courses, short-term up-skilling and re-skilling courses.
Veranda Learning Solutions acquired 100 percent shareholding in Brain4ce Education Solutions Private limited, more commonly known by its brand name 'Edureka' for ₹195.91 crore.
