Co is a diversified and integrated technology-enabled provider of education products, services, content and infrastructure, with a presence across the education value chain. Since co commenced operations in 1996, it has diversified its operations across six business segments, spanning the education value chain: Test preparation and training services, generally referred to as “test prep”, conducted under co’s well recognized brand Career Launcher; publishing and content development, conducted under co’s brand GK Publications; integrated business, marketing and sales services for corporates, conducted under co’s brand Kestone, including event management, marketing support (including digital marketing support), customer engagement, managed manpower and training services; vocational training programs implemented by co under Government schemes in various States across India; integrated solutions to educational institutions and universities, including business advisory and outreach support services, under co’s brand CL Media, as well as research incubation and support services conducted under the brand Accendere; and K-12 schools operated under co’s brand IndusWorld School. Company will not receive any proceeds of the offer for sale by the selling shareholders. However co intends to utilize net proceeds of the fresh issue for funding working capital requirements of Company and its Subsidiaries, GKP and Kestone; for pre-payment of outstanding amount of a debt facility availed of by co’s Subsidiary, CLIP; for acquisitions and other strategic initiatives.
Reasons to "Avoid"
Co’s financial performance doesn’t looks attractive as co’s performance ratios are not very strong. Also, co face significant competition from local or regional players in the business segments and geographical markets in which it operate. In the test preparation and training (generally referred to as “test prep”) segment, co face competition in each of the courses that it offer, from large players that have wide coverage across India, including T.I.M.E., Mahendra Coaching, JK Shah Classes, Aakash, GATE Forum, Career Power, IMS, PT Education, Career Forum and FIIT-JEE, as well as regional players.
At price band of Rs 500-502 ,p/e multiple will turn out to be 27 on post issue annualized H1FY17 eps of company. Looking after financial performance of company, issue looks expensive at current level.
Hence we recommend "Avoid" on issue.
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