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Veranda Learning IPO  Fundamental Analysis

Veranda Learning Solutions (the Issuer) is engaged in the business of offering diversified and integrated learning solutions in online, offline hybrid and offline blended formats by providing long term and short term preparatory courses for students preparing for UPSC Exams, State Public Service Commission, Staff Selection Commission, Banking, Insurance, Railways and Chartered Accountancy. The Issuer also provides these courses to employees of corporates through B2B offerings. The Issuer provides services primarily to companies in Technology, CPG and Retail, Industrials, and BFSI industries. It has emerged as one of the most trusted partners to several Fortune 500 companies in recent years and has worked with over 30 Fortune 500 companies in the last three fiscals. Some of the Issuer’s key clients include Adobe, Uber Technology and 7-Eleven.

It started its operations in December 2020 and during 9MFY22, 42,667 Students and professionals have enrolled across all courses, being 16,793 in offline models and 25,874 in online model. The Issuer employed 8 Student advisors, 166 Mentors and operated 25 PDCs across 25 cities and towns and 2 states.

As of December 31, 2021, the Issuer had 431 employees on payroll and 400 outsourced employees. Its team includes Mentors, Student Advisors and non-teaching staff including content team to administer business operations such as coordinating classrooms, database and specific-marketing activities.

Services offered

The Issuer offer its services through its four Wholly-Owned Subsidiaries which are-

  1. Veranda Race Learning Solutions- In December 2020, Veranda Race, acquired the content, brand and education materials from Chennai Race Coaching Institute Private Limited. In March 2021, Veranda entered into an arrangement where it designated Chennai Race as a PDP of Veranda Race and eventually all centres managed and run under Chennai Race also became PDCs of Veranda Race. Chennai Race was founded by Mr. Bharath Seeman, who is presently employed by Veranda Race. Veranda Race has become one of the recognised brands in the state of Tamil Nadu and Kerala to provide training and coaching for competitive exams. Veranda race offers Banking and Insurance exam Courses and SPSC, SSC and RRB video courses and its fee structure ranges from ?9,000 to ?15,500.
  2. Veranda XL Learning Solutions- It offers courses for Chartered Accountancy. Veranda CA has entered into a Chartered Accountancy Training Services Agreement dated December 31, 2020 with Trans Learning LLP ("Trans LLP"). Pursuant to the arrangement, Trans LLP provides necessary services and digital content for CA modules to Veranda CA. Veranda CA has 2,000+ hours of recorded digital learning units covering main and elective papers for all levels of CA exams. Veranda CA offers services through the online model and has approximately over 400 students enrolled with it. Veranda CA has recently started Campus in Campus Model. Its fee structure ranges from ?9,999 to ?39,500
  3. Veranda IAS Learning Solutions- Veranda IAS offers coaching services to aspirants appearing for UPSC preliminary and main exams, and personality test, and (ii) State Public Service Commission Group-I exams. Veranda IAS has entered into a UPSC training and Miscellaneous Service Agreement dated March 2021 with Ms. S Praba, who operates her business in Chennai by the name of SAI IAS Academy. The fee structure ranges from ?29,999 to ?75,000.
  4. Brain4ce Education Solutions (Edureka) - Edureka is one of the recognised online education platform for technology professionals. Edureka commenced operations in December 2011 and in a span of 10 years, it has built a brand with its YouTube videos getting around 3.6 million unique views every month. Edureka provides skills on over 50 technologies. Currently, Edureka offers academic learning, professional skilling and corporate training services in trending courses related to technologies in Cloud Computing, Devops, ML/AI, Data Science, Big Data, Block Chain, Cyber Security, Robotic Process Automation and many other fields through live online classes. The fee structure ranges from ?4,992 to ?275,500.

The Issuer provides learning solutions through the below models:

  • Online model- The Students can access comprehensive study material through our website at 360.verandalearning.com or through their mobile application in the name of Veranda Learning, comprising integrated courses offered exclusively for our Students.
  • Online Live Instructor led Service Model- Courses are offered online through proprietary learning platforms developed by an integrated inhouse technology team for conducting online courses. Currently Edureka offers such services in courses related to emerging technologies, such as Cloud Computing, AI/ML, Data Science, Robotic Process Automation, Full Stack Web Development, Programming, Big Data, Business Intelligence etc.
  • Offline Hybrid Model – Some specified courses are offrered in offline model, which is the typical and traditional way of in-person teaching in the classroom. The issuer has appropriate technology in this model to create an offline hybrid and offline blended delivery model.
  • Offline Blended Model- The offline blended model of offering services is a mix of online content and offline delivery, wherein the centre delivers LMS Study Materials together with traditional class room experience of personal mentoring from Mentors, with a dedicated Mentor in each class room available for assistance to a Student.
  • Campus in Campus Model -Under this model, the Issuer collaborates with educational institutions to provide coaching services where the teachers are trained by Veranda and provide coaching services in the class room of the educational institution. The educational institution is equipped to provide digital content through video lectures, books, regular tests and mock exams.

Financial Review of Veranda Learning IPO

The financial outlook of the Issuer does not has a track record as the company is a new start up and started its operations in the year 2020. The company has not break even and has posted a loss of Rs 18.27 crore on its revenues of Rs 15.66 crore for H1FY22 and loss of Rs 8.28 crore for FY21. The Issuer has borrowings of Rs 215.80 crore which is at a higher side and converts to debt to equity of 9.5x.

Table 1 - Financials and Ratios (Amount in Rs Crore)
Title H1FY22 FY2021
Total Revenue 15.66 2.54
PAT -18.27 -8.28
EBITDA -15.05 -7.62
Total Assets 307.37 11.52

Valuation and peer comparison

The company has no listed peers as per the RHP but the Issuer has many rivals like BYJU’s, Upgrad, Vedantu, Unacademy amongst other players. The valuation of the company is unascertainable as the company is incurring losses.

Issue Details

Veranda Learning Solutions IPO amounting to Rs 200 crore opens on 29th March with price band of Rs 130-Rs137 per share. The retail quota is 10% with minimum lot size of 100 shares (Rs 13700). The offer closes on 31st Mar 2022 and is expected to list on 7th April. Objects of the offer are to repayment of certain borrowings (Rs 60 crore), payment of acquisition consideration of Edureka (Rs 25.19 crore) and growth initiatives (Rs 50 crore).

Conclusion and Investment Strategy

Veranda Learning is a provider of diversified courses which includes competitive exam courses, professional courses, short term upskilling and reskilling courses. The Issuer has grown through collaborations and acquisitions in the last year with acquisition of Race academy and recent being Edureka. Edureka has a strong presence; it has customers based overseas, including many customers from the United States and United Kingdom. With the acquisition of Edureka, the Issuer has access to international markets like US and UK and will continue to expand its overseas customer base. The Issuer has weak financials; it is yet to establish its track record and seems to be in a very nascent stage for IPO. Hence it is advisable to skip and avoid this IPO.

Reviewer recommends Avoid to the issue.

Review By CA Priyanka Choudhary on 23rd Mar 2022

Review Author

About CA Priyanka Choudhary

CA Priyanka Choudhary, a freelance chartered accountant

Priyanka Choudhary Jain is a Chartered Accountant and an experienced credit analyst. She has worked with CRISIL as Senior Credit Analyst on ratings assignments including business and financial analysis in Corporates as well as the Public Finance Sector.

Email: [email protected]

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at own risk. Investors should bear in mind that any investment in stock markets are subject to unpredictable market related risks. Above information is based on RHP and other documents available as of date coupled with market perception. Author has no plans to invest in this offer.



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