Veranda Learning IPO (Initial Public Offering) is open for enrollment today and will remain open for bidding until March 31, 2022. The education services player plans to raise Rs 200 crore through its Initial Public Offering (IPO), which is an entirely new issue. It will be the last issue of the current fiscal year as the IPO closes for subscription on Thursday, March 31, 2022. It is the fifth edition of the calendar year 2022 after AGS Transact Technologies, Adani Wilmar, Vedant Fashions and Uma Exports.
Veranda Learning IPO: price band
Price range of the book built issue of par value Rs 10 per share share is set at Rs 130 to Rs 137 per share. The coaching service company plans to raise Rs 200 crore from its public issuance.
Veranda Learning IPO: Subscription Status
The first public offering of Veranda Learning Solutions has so far subscribed 17 percent on March 29, the first day of the bidding, when investors bid for 29.58 lakh shares against the offering size of 1.17 crore shares. The size of the offer has been reduced from 1.45 to 1.17 crore shares after the company raised Rs 46.75 crore from three main investors on March 28. Retail investors have bid for 1.84 times of their quota, while non-institutional investors have bid for 1.35 lakh shares. Qualified institutional buyers have yet to participate in the offer.
Porch Leather IPO: GMP
According to market observers, Veranda Learning IPO GMP (grey market premium) is not available as the stock has yet to make its gray market debut.
Porch IPO: Investment Reasons
With this financing, the company plans to repay or prepay all or some of the loans up to Rs 60 crore in whole or in part. It will use Rs 25.19 crore to pay for the acquisition of Edureka and about Rs 50 crore for growth initiatives. There are no publicly traded companies in India engaged in a business similar to that of Veranda Learning Solutions.
In its Red Herring prospectus report, Veranda highlighted that the education sector has grown at a CAGR of 14 percent over the past decade due to India’s demographic profile, rapid urbanization, higher education spending, lack of quality educational institutions, highly competitive market, and low penetration of education.
Veranda Learning IPO: Financials
For the 2020-21 fiscal year, the company reported a net loss of Rs 8.3 crore with total revenue of Rs 2.54 crore. The net loss increased to Rs 18.26 crore despite an increase in revenues to Rs 15.66 crore for the period ended September 30, 2021.
According to Arafat Saiyed, Research Analyst, Reliance Securities, the FY22 annualized IPO is at 25x market cap/turnover for a loss-making low-track company that looks expensive and the market is highly competitive.
Veranda Learning IPO: Should You Subscribe?
Analysts are skeptical on the matter amid subdued financial data, negative earnings, expensive valuations, tepid growth and fierce competition in the education sector.
“The IPO is aggressively priced and leaves hardly anything meaningful on the table for investors in the medium term,” Saiyed added. “All positives are captured in the valuation and valuation is not beneficial to investors.”
“While the company’s business model is technology-driven, asset-light and scalable with a proven track record of promoters, along with a results-oriented teaching method with a 360-degree approach and diversified course offerings and delivery channels, but ensuring the company’s finances and its valuations, we recommend ‘Avoid’, says brokerage firm Hem Securities.
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