Veranda Learning IPO subscribed 37% so far on Day 1; retail portion sails through

The education services player is eyeing to raise Rs 200 crore via its initial public offering (IPO), which is entirely a fresh issue. The offer will close for subscription on Thursday, March 31, 2022.

According to the data from BSE, the company fetched bids for 44,06,400 equity shares as against 1,17,88,365 equity shares offered in the issue as of 12.20 pm on day 1.

The portion for retail bidders was subscribed 2.5 times, whereas non-institutional investors received 27 per cent bids. However, the qualified institutional buyers quota received no bids yet.

The company has reserved up to 75 per cent of the total offer for qualified institutional buyers (QIBs), whereas non-institutional investors (NIIs) will get 15 per cent allocation. Retail bidders will get the remaining 10 per cent allocation.

The company will sell its shares in the price band of Rs 130-137 per share. Investors can bid for a minimum of 100 shares and then in the multiples of 100 thereof.

The issue is not tracked by many brokerages, due to its small size. However, those tracking the offering, mostly have an ‘avoid’ rating with a word of caution to the investors.

Analysts are sceptical over the issue following the muted financials, negative bottomline, pricey valuations, tepid growth and high competition in the education sector.

On FY22 annualized financials, the IPO is at 25x market cap/sales for a loss-making company with a low track which looks expensive and the market is highly competitive, said Arafat Saiyed, Research Analyst, Reliance Securities.

“The IPO is aggressively priced and hardly leaves anything meaningful on the table for investors in the medium-term perspective,” he added. “All positives are captured in its valuation and valuation is not favourable for investors.”

It is the last issue of the current financial year as the issue closes for subscription on Thursday, March 31, 2022. It is the fifth issue of the calendar year 2022 after AGS Transact Technologies, Adani Wilmar, Vedant Fashions and Uma Exports.

Currently, the company is loss-making and is forecasted to remain loss-making in the medium term, said Choice Broking with an ‘avoid’ rating for the issue.

The company offers online and offline coaching services for career-defining courses such as UPSC, Chartered Accountant, banking, and government exams to students, graduates, professionals, and corporate employees.

Vijay Singhania, Chairman, TradeSmart said that Veranda Learning Solutions will be keenly watched as it is an ed-tech venture offering training programs for competitive exams preparation in India at multiple levels and segments.

“Markets will be keenly watching investor interest in this new-age company and bidding from retail and institutional buyers will help revive the sentiments of the primary market,” added Singhania with no recommendation on the issue.