CL Educate IPO: Peer Analysis

CL Educate  Peer Analysis

CL Educate IPO to raise Rs. 239 crore is slated to open on 20th March 2017. CL Educate operates across segments in the education industry including test preparation, K-12 and vocational training.

Related Post CL Educate IPO Review
CL Educate IPO: Issue Details 
Issue Period Issue Opens On*: Monday, March 20, 2017
Issue Closes On  : Wednesday, March 22, 2017
Price Band Rs.500 – 502
Bid Lot 29 Equity Shares and multiple thereof
Issue Size (No. of Shares) Fresh Issue of 2180119 Equity Shares and
Offer for Sale of 2579881 Equity Shares
Issue Size ( Rs.) Rs. 238.95 Crores
Issue Structure :  
QIB* 50% of the Offer ( 2,380,000 Equity Shares) ( Rs. 119.48 crores)
NII 15% of the Offer ( 714,000 Equity Shares) ( Rs. 35.84 crores)
Retail 35% of the Offer ( 1,666,000 Equity Shares) (Rs. 83.63 crores)
Lead Manager Kotak Mahindra Capital
Registrar Karvy Computershare Pvt. Ltd.

About CL Educate:

CL Educate Limited has its  operations across 6 business segments, spanning the education value chain:

  • Test preparation and Training services under brand Career Launcher
  • Publishing and Content Development conducted under the brand GK Publications;
  • Integrated business, marketing and sales services for corporates, conducted under our brand Kestone, including event management, marketing support (including digital marketing support), customer engagement, managed manpower and training services;
  • Integrated  solutions to educational institutions and universities, including business advisory and outreach support services, under our brand CL Media, as well as research incubation and support services conducted under the brand Accendere; and
  • Vocational Training Programs under Government schemes in various States across India;
  • K-12 schools operated under throuh brand Indus World
CL Educate: Peer Analysis
  CL Educate  MT Educare Career Point
Particulars/ Year FY16 FY16 FY16
Revenue from Operations 282.641 243.92 69.54
Operating Profit 35.962 35.98 17.83
Profit before tax  30.849 44.99 21.22
Net Profit  21.676 29.22 14.17
OPM % 12.72% 14.75% 16.01%
NPM % 7.67% 11.98% 12.72%
Networth 242.3 145.55 346.71
NAV 202.92 36.6 191.2
RONW %  8.95% 20.08% 4.09%
Post issue equity 14.12 39.82 18.13
FV 10 10 10
EPS 15.35 7.34 7.82
IPO Price / CMP 502 86.3 111.4
PE (Pre Issue Equity) 32.7 11.76 14.25
P/BV 2.47 2.36 0.58
Market Cap 708.82 343.65 201.97
Market Cap/Sales Ratio 2.51 1.41 2.9
Cagr sales 1 yr 3.33% -1.13% 8.80%
Cagr sales  3 yr 12.43% 16.53% -0.49%
Cagr  PAT  1 yr 2.24% -59.13% -0.60%
Cagr  PAT  3 yr 13.46% 16.55% -0.53%

CL Educate has mentioned MT Educare, Zee Media and Teamlease as its peers in the RHP. However it is felt that Zee Media & Teamlease are not comparable with CL Educate .

MT Educare which is in same space has churned out a poor performance. MT Educare went public in March 2012 at a price of Rs. 80/- and quotes s only a tad abvove the IPO price in last 5 years. While its sales and profit growth in last three years are comparable to CL Educate, it has turned in a poor performance in the previous year.  But even as it sales & profit are in last one year is lower than CL Educate , the figures for CL Educate itself are also quite mediocre. Still MT Educare’s financial ratios like OPM, NPM, RONW are better than CL Educate  and further it enjoys a very low PE ratio, whereas CL Educate  is asking much higher PE ratio.  Further its Market Cap/Sales ratio is also lower. Thus comparatively CL Educate IPO pricing looks stretched.

Career Point which went public in Oct 2010 at a price of Rs. 310 is ruling well below its issue price.  Despite its dismal performance, Career Point has better OPM and NPM than CL Educate  though its RONW is lower. Career Point trades at a Price to Earning ratio of 14-15 where as CL Educate IPO  is demanding a much higher  PE ratio based on IPO price.

Thus Overall CL Educate IPO price and industry in which it operates does not appear to be attractive.

Standard disclaimer:  I am not a SEBI registered analyst. I may have vested interest in every stock I discuss. Please do your own due diligence as stock market investments have high degree of inherent risk. 

Leave a Reply