CL Educate’s Q3 results reflect continued growth

Growth momentum continued in Q3 FY23 despite Q3 traditionally being the weakest quarter due to exams. EdTech and MarTech revenues were up 31% and 22% respectively on a y-o-y basis. CL has crossed FY22 revenue and EBITDA in 9m FY23.

While much of this recovery is due to return to post Covid normal, drivers for continuing growth are becoming stronger. The EdTech business has expanded network in 9M FY23 at 3x the rate as compared to the last year. CUET is a potential growth driver for EdTech. MarTech business’s digital platform and international business are well positioned for growth. With net cash pile increasing every quarter, CL has the fuel to step on the gas.

Key Points:

  • EdTech and MarTech both registered decent growth, with offline components of both businesses coming back. Run rate now hitting pre-Covid levels
  • 500 franchisee network plan well underway. 54 new centers added in Mar-Dec ’22 as against 17 in the previous year. The management expects this momentum to continue
  • Company investing in growth via higher marketing spends, people and technology – Margins to go up in next 3-4 quarters once these expenses even out
  • New initiatives in the MarTech business also bode well
  • Net cash up from Rs 81 crore as on Q2 end to about Rs 88 crore, gross debt now negligible.

At the current market cap of around Rs 305 crore, and EV of around Rs 207 crore, the CL stock could be cheap, given its growth trajectory. Investors are advised to their own research.

Our commentary on CL’s Q3  FY23 report is posted here.

PS: Wisdom-IR is investor relations advisor to CL Educate. In case you have any queries for the management, you can address them to us. 

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