The Rs. 239 Crore Initial Public Offering of CL Educate is all set to hit the market today. The company sells a fresh issue of 21.80 lakh shares by existing shareholders in the Rs. 500-502 apiece price range.
The company has allotted 14.28 lakh equity shares worth Rs. 71.69 crore to anchor investors, including Sundaram Mutual Fund, Canara HSBC Oriental Bank of Commerce Life Insurance Company, DSP Blackrock Microcap Fund, and ICICI Lombard General Insurance.
CL Educare plans to use the proceeds of the issue for acquisitions and strategic initiatives. The company will also use some of the proceeds to repay loans to fund working capital requirements.
Some Analysts find the issue unattractive due to higher valuations as compared to the listed peers.
The company offers preparation courses for MBA, Banking & SSC, engineering, medical, and civil services, law and others under the brand Career Launcher.
Also Read: CL Educate Ltd IPO: You Must Know
It publishing and content development arm offers test prep titles for professionals and entrance examinations under the brand ‘GK Publications’.
CL educate is one of the leading player in the education provider space, but recently it witnessed slightly higher debtors. Hence, the current valuation leaves limited upside and recommend that investors avoid the issue.
The company’s business is working capital-intensive, which coupled with expensive valuations may not provide significant upside to the investor. So the brokerage has a neutral rating on the issue.
Under the union budget 2017-18, the allocation to the education sector comprised Rs. 46, 356 crore for school education and Rs. 33, 330 crore for higher education.
In total, the Union Budget 2017-18 announced Rs. 79, 686 crore to the education sector, up 10.1 per cent over Rs. 72, 394 crore in the previous year.
This is an unregulated sector; the market is typically dominated by larger branded players across various streams.