Veranda Learning Solutions’ Rs 200 crore IPO opened for subscription today. Investors will be able to bid for the public issue in a fixed price band of Rs 130-137 per share. Ahead of the issue, the company’s anchor book portion saw only three institutional investors participate, pouring in Rs 46.75 crore for a 23.38% stake in the company. Interestingly, no domestic mutual fund participated in the anchor book portion of Veranda Learnings’ IPO while analysts raised questions on the financial performance and valuations. However, retail investors oversubscribed their portion within minutes.
The public issue will remain open for investors to participate in till Thursday, March 31, 2022. Promoter’s shareholding will be cut to 64.72% from 87.66% through the IPO.
Three investors took part in the Anchor book portion of the issue. The company has allotted 34.12 lakh equity shares to anchor investors at the issue price of Rs 137 per share. The anchor investor portion includes AG Dynamic Funds Limited, Resonance Opportunities Fund, and Next Orbit Ventures Limited. Of these, the largest portion was picked by AG Dynamic Funds. Investors can bid for shares of the company in a price band of Rs 130-137 per share, in a bid lot of 100 equity shares and multiples thereafter. 75% of the issue has been reserved for QIBs while 15% is for Non-Institutional Investors (NII) and only 10% for retail investors.
So far on day one, retail investors have oversubscribed their portion. Retail investors bid for nearly 20.8 lakh equity shares or 1.3 times the reserved portion. NII portion was subscribed 0.03 times while QIBs were yet to arrive on the scene. Overall the issue has been subscribed 0.18 times so far.
Analysts at Hem Securities have an ‘Avoid’ rating on the issue. “Although Company’s business model is Technology-driven, Asset Light & Scalable with a proven track record of promoters along with a result-oriented method of teaching with 360-degree approach & diversified course offerings and delivery channels looking after financials of company & valuations, we recommend “Avoid” on the issue,” they said. Analysts added that the price band pimples a p/b multiple of 8.15x on pre-issue book value basis. Analysts at Aashika Research said that the issue, at the upper end of the price band, demands a P/S multiple of 4.4x based on H1FY22 annualized post-issue fully diluted Sales.
Financials of the company showed that Veranda Learning generated a revenue of Rs 2.5 crore last year and registered a loss of Rs 8.3 crore.
Using the funds raised through the issue, Veranda Learning intends to repay or pre-pay, in part some borrowing and use the same funds towards the payment of acquisition consideration of Edureka or repayment of a bridge loan availed specifically for the purpose of discharge of such acquisition.