Signs of growth are looking positive for both the EdTech business of CL Educate, while the MarTech business focused on internationalization and improvement of margins.
MBA entrance exam numbers moved up after several years of stagnation, raising prospects of better growth for CL Educate’s flagship business: CAT entrance tests. H2 FY24 will see the third cycle of CUET exam preparation kicking in, the market could expand again this year. CL’s study abroad business has shown good growth momentum on a small base.
A change in the law exam cycle caused a temporary growth slowdown in the law business, however, as the new cycle settles, CL expects long duration courses to make a comeback.
Margin improvement and internationalization are the focus at Kestone business. Some condensed highlights below:
POSITIVE GROWTH ENVIRONMENT
- While total revenue in Q2 was the same as Q1 – 7.5% growth in EdTech tempered by 10% degrowth in MarTech, management sees several growth positives.
- CAT enrolments grew 30% to 3.3 lakh for 2023, after several years of stagnation. CUET’s third cycle kicks in shortly, growth could continue. Study Abroad has grown over 90% (on a small base).
- Changed law exam cycle caused temporary blip in law revenues, long duration courses are expected to return.
FINANCIAL HEALTH STRONG AND IMPROVING
- Net cash remains above Rs 90 crore.
- Focus on margin expansion sees >80% growth in MarTech profitability, despite flat topline as Kestone moved away from
BUY BACK SLOW DUE TO CHANGE IN SEBI RULES
- Open market offer mode of buyback has been affected due to change in SEBI guidelines, causing slower than planned progress in CL’s buyback. The company has sought advice from SEBI.
The detailed report can be seen 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.