The Q2 results of CL Educate (BSE: 540403 | NSE: CLEDUCATE), a diversified education services company, show continued strong growth on the back of the acquisition of the digital exam business, DEXIT GLOBAL.
Revenue for Q2 FY26 67% to Rs 164 crore, while EBITDA more than doubled to Rs 24 crore. For the half year, revenue is up 62% to Rs 310 crore, from Rs 191 crore in H1 FY25. EBITDA for the half year was 93% to Rs 41 crore. Q2 shows acceleration in EBITDA is due to larger impact of the DEXIT business in overall revenues. The EBITDA margin in Q2 FY26 is 14.4% as against 10.9% in Q2 FY25.
The Q2FY26 revenue of the DEXIT business was Rs 76 crore, as compared to Rs 56 crore in Q1 FY26. In terms of share of total revenue, in Q2, the DEXIT business was 46% of total revenues as compared to 38% in Q1 FY26. DEXIT has better margins than the other two main businesses of CL Educate. If we look at segmental, in Q2, DEXIT’s EBIT margin was 23%, as compared to 7% for Martech and 2% for EdTech.
Margin of Edtech, run under the brand Career Launcher, continues to be depressed due to topline pressures. Revenue in Edtech was down 15% in H1 FY26 compared to H1 FY25. This business comprises mainly test prep for MBA (CAT) and Law (CLAT) exams is facing pressure from digitalization. This trend is across the sector, companies focusing on other exams like NEET or JEE are also facing revenue growth pressure as the market fragments from offline to online. It is not yet clear where this trend will settle.
The Martech business, run under the brand Kestone Integrated Marketing, is showing growth, though in single digits. A pick in growth in this business in the second half of FY26 will send a positive signal to investors.
Reported PBT for H1 FY26 was Rs 5.4 crore, due to surge in finance cost to Rs 26 crore as compared to Rs 0.74 crore in H1 FY25. This increase is partly due to an accounting entry of ~Rs 12 crore to adjust of unpaid coupon on preference shares of DEXIT that need to be redeemed to NSE. If we adjust for this, adjusted PBT becomes Rs 17.7 crore, showing a healthy PBT margin of 5.6% despite increased financing cost as a result of the debt-funded DEXIT acquisition.
Overall, DEXIT has become the key driver of CL’s performance. Given the performance of this business in H1 FY26, the acquisition seems to have been a good transaction for CL Educate. In H1 FY26, DEXIT reported an EBIT of ~Rs 24 crore. If we take half of H1 depreciation as coming from DEXIT, the EBITDA of this business works out to around Rs 33 crore. Cl Educate paid Rs 230 crore in EV terms for DEXIT. Just on the approximate H1 EBITDA we just calculation, the EV/EBITDA valuation paid comes to around 7x. On a full year basis, this could well come down to say 5x, which is cheap for a business of this quality.
Overall, CL remains on track to create shareholder value. The first full year performance of DEXIT will have a great bearing on this. H1 FY26 performance is good, investors will want to see how the business delivers in H2.
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.