The initial reaction of the market to the Q4 and full year FY23 results of CL Educate (NSE: CLEDUCATE, BSE: 540403) was negative. The stock fell 2% on 11-May-23 to close at Rs 53.15, the Thursday of the last week, the day the results were declared. However, the next day, the stock closed 14% higher to close at Rs 60.75. It appears after deeper analysis, and post the investor call on 11th, some investors took a positive view of CL’s potential.
The last two days 11th and 12th May also saw a lot of trading compared to the normal volumes for CL Educate. Average trading on the two days was 532,000 shares, around 5.5x the daily normal. Clearly some existing investors sold, and some existing and new investors bought.
The recording of the conference call can be found here, in case someone who missed the call would like to go over it. The investor deck can be found here.
To save some work, some key information items shared in the invest listed below:
- The management shared they see return of growth in MBA test prep. This business was around Rs 70 crore pre-Covid (FY19). In FY24 or latest by FY25, they expect this to hit Rs 100 crore
- Similar, law test prep was Rs 63 crore in FY19. The company is targeting Rs 100 crore here by FY24 or latest by FY25. In Law entrance, CL Educate continues its dominance, 7 of the top 10 rankers in CLAT and 6 out of the top 10 in AILET were Career Launcher students.
- The management is focused on creating two new growth drivers for the Career Launcher (Edtech) business: CUET exam test prep, and Study Abroad. These were identified as key growth drivers in FY23.
- In Kestone (Martech) business, international revenue grew 25%, and is the focus for future growth. Its technology platform VOSMOS is also expected to be a growth driver.
- Net Cash has crossed Rs 99 crore.
For further analysis, investors can try to project the following table:
CL Educate has a target of taking ROE over 15% in the next 2-3 years.
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.