MT Educare IPO : Price Band, Details, Review & Allotment

mt educare poMT Educare which runs coaching classes under the name of Mahesh Tutorials has decided to tap the primary markets with its offer of 1.27 crore shares to the public. Out of this 1.27 crore shares Helix Investment will offload 0.80 crore shares from its current holdings and rest 0.47-0.43 crore shares will be a fresh issue by the company to raise Rs 35 crore.

About MT Educare:

Incorporated in 2006, MT Educare Limited is an education support and coaching services provider for students in the secondary and higher secondary school. Also they provide coaching services for students pursuing graduation degree in commerce, preparing for various competitive examinations and undertaking chartered accountancy examinations.

MT Educare has serviced over 58,300 students in the year 2010 – 11, has over 1400 faculty & staff and 188 centres in 110 locations. MT Educare is one of the leading coaching services providers in Maharashtra, with primary operations in Mumbai with 138 Coaching Centres in 85 locations as on May 15, 2011. Additionally, They have recently started operations at six locations in New Delhi and Gurgaon under the brand “Study Mate – Powered by MT Educare” through HT Learning Centres Limited (“HTLCL”).

Company Promoters:

Mahesh R. Shetty, aged 46 years, is the Chairman and Managing Director of our Company.

MT Educare IPO Issue Details:

  • Issue Opens on: Tuesday, March 27, 2012
  • Issue Closes on: Thursday, March 29, 2012
  • IPO Rating: IPO Grade 4 by Crisil –  indicating above average fundamentals
  • Issue Size: Rs. 35.00 Crore
  • Face Value: Rs. 10 Per Equity Share
  • Issue Price: Rs. 74 – Rs. 80 Per Equity Share
  • Minimum Order Quantity: 80 Shares
  • Market Lot: 80 Shares
  • Maximum Subscription Amount for Retail Investor: Rs. 2,00,000
  • Listing At: BSE, NSE
  • MT Educare IPO Registrar: Link Intime India Private Ltd
  • MT Educare IPO Lead Manager: Enam Securities Private Limited

MT Educare IPO: Positives:

  1. Positioned in the fastgrowing domestic education sector which is poised to grow strongly
  2. MT Educare is increasingly relying on technology as a part of business strategy, which can make resources more efficient.
  3. The company is debt-free at present.
  4. IPO Rating: IPO Grade 4 by Crisil – indicating above average fundamentals

MT Educare IPO: Negatives:

  1. Operates at a relatively lower margin compared to peers
  2. The performance of its peers on the bourses in recent times has been lacklustre following volatile market conditions
  3. High reliance on the founder managing director, Mahesh Shetty, for focus and direction in business strategy and operations, his absence for prolonged periods can have an adverse impact on the overall functioning.

MT Educare Listed Peers:

You can compare MT Educare with its listed peers: Career Point, Everonn Education, Educomp Solutions and Core Education & Technologies.

Objective of the Issue:

The object of the issue are to:

  1. To provide exit route to Private equity investor  Helix Investments
  2. Part financing the cost of construction of a PUC campus in Karnataka, which includes the cost of acquisition of land;
  3. Establishing new Coaching Centres at 20 locations; and
  4. General corporate purposes.

MT Educare Shareholding Pattern:

Shareholding Pattern Pre Issue (%) Post Issue (%)
Promoter 48.2 42.96
Helix 28.6 5.26
Bodies corporate 1.4 1.25
Inviduals 19.8 48.8
Trust 1.9 1.73
Total 100 100

MT Educare Financial Summary:

Financial Performance (Rs/Cr)
Particulars FY10 FY11 H1 FY12
Sales 83.24 104.78 70.33
Other Income 2.54 2.56 1.94
EBIT 7.37 13.05 14.25
Depreciation 7.89 8.3 3.63
Interest 0.1 0.11 0.2
PAT 5.23 8.24 9.75

MT Educare Valuation:

At the higher price band of Rs 80, the shares of MT Educare command a price-to-earnings (P/E) ratio of 16.6 on a post-IPO equity considering annualised earnings per share in the six months ended September 2011. Its peers trade at a P/E of 8-12, which makes MT’s valuation look expensive. In the last few months, several listed education players have not been able to earn handsome returns on bourses following volatility in the stock markets. Investors with higher risk appetite may consider investing in MT’s IPO.

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