CL Educate lists at Rs 398, 20.72% discount to issue price

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NEW DELHI: CL Educate, which owns brand Career Launcher, made a poor debut on Friday by listing at Rs 398 on BSE, a discount of 20.72 per cent over its issue price of Rs 502.

At this price, CL Educate’s market capitalisation (m-cap) stood at Rs 564 crore against peer MT Educare’s Rs 322 crore.

The company’s IPO, which ran during March 20-22, was oversubscribed 1.90 times — with qualified institutional buyers (QIBs) category getting oversubscribed 3.65 times and retail investors 1.63 times. That said the HNI portion went undersubscribed at 21 per cent.

The company’s Test prep offers preparation courses for MBA, banking & SSC, engineering, medical, civil services, law and others under the brand Career Launcher. In addition, the company’s publishing and content development offers test prep titles for professionals and entrance examinations under ‘GK publications’ brand.

The Centre’s outlay on education — higher education, K12 elementary and K-12 secondary — has increased at a CAGR of 6.5 per cent from Rs 50,800 crore in 2010-11 to Rs 69,600 crore in 2015-16.

CRISILBSE 0.52 % Ratings in a note said that the domestic test prep market is estimated at Rs 37,800 crore, as of 2015-16, up 14 per cent CAGR over 2008-09, driven by factors including escalation in income levels, increased spend on education, high competition for limited seats in quality institutes and complexity of entrance exams.

Being an unregulated sector, the market is typically dominated by larger branded players across various streams, it noted.

Also, “the graduate segment accounts for 56 per cent share of the Indian test prep industry, while the job-oriented segment accounts for 30 per cent share (on account of high enrollments, as government jobs still enjoy mass appeal among the youth of India, especially in semi-urban and rural areas, although the coaching fees are relatively lower in this segment), and the postgraduate segment accounts for 13 per cent, CRISIL said.

As on September 30, the company had 151 test-prep centers in over 87 cities in India, eight K-12 schools spread across six cities and 28 vocational training centers and offices.