Having completed the acquisition of the Digital Exam Assessment (DEX) business of NSEIT Limited, CL Educate is set to begin a new phase in its evolution from FY26.
The DEX business showed up for the first time in CL Educate’s financials when it declared its Q4 and full year results for FY25 declared yesterday. The acquisition was completed on 20th February 2025. The Q4 results show a revenue of Rs 28 crore from the DEX business since this date till the end of the quarter.
DEX: The Largest Segment for CL
The DEX business is now the single largest business for CL Educate. While not included in reported financials, the company disclosed the full year performance of the DEX business in its investor presentation. For FY25, DEX realised revenue of Rs 205 crore, with EBITDA of Rs 34.4 crore.
On a proforma basis, if we were to add the full year performance of DEX to CL Educate, the total revenue for FY25 comes to around Rs 540 crore, of which DEX is 38%. The second largest business is Test Prep, known by its brand Career Launcher. It reported a revenue of Rs 189 crore for FY25, or about 35% of total revenue. The Martech business, run under the brand Kestone, reported revenue of ~Rs 150 crore or ~28% of total revenue. DEX’s share of EBITDA is higher at 54%, since it is a high margin business
DEX and Kestone to drive growth in FY26
CL management believes there is considerable scope for DEX to grow, given that so far it was focusing only on a select set of exams. CL wants DEX to address new segments like university exams. It has also positioned DEX for exams like JEE and NEET. Accordingly, the Career Launcher business announced exit from JEE, NEET and Bank SSC exam categories, to avoid perception of conflict of interest. These were not big categories for CL anyways, contributing to around Rs 6 crore of annual revenue, and in fact, EBITDA negative.
Kestone revenues grew a strong 22% in FY25, with international revenue growing 34% to Rs 44 crore; these now make up for over 29% of total Kestone revenues. CL expects double digit growth to continue in Kestone. Kestone’s new subsidiary Kestone Utsav, that will focus on marriages and luxury events is also likely to start contributing to revenues in FY26.
The Career Launcher or the Test Prep business is in consolidation mode, as digital penetration gradually changes student behaviour in its two key programs – MBA and Law entrance. Study Abroad and CUET have yet to reach meaningful size to drive topline growth for the overall segment.
Reasonably priced, giving scope for upside
The market reacted negatively to the results, with CL Educate shares closing around 7% at Rs 87 yesterday. This could have been a reaction to the loss reported in Q4, as bottonline was hit by one off items like cost of closure of JEE/NEET type offerings, plus the cost of concluding the DEX acquistion. Also, investors may have been disappointed by the lack of growth in the Career Launcher business.
At this price, the market cap is Rs 470 crore, and the EV is around Rs 660 crore. At this price, the valuation comes to around 10x based on FY25 proforma statement (including DEX full year). This valuation creates scope for upside.
This is an inexpensive valuation for a company that is No 1 or No 2 in all its businesses: from DEX to MBA and Law test prep to B2B experiential marketing. If Q1 results show indication of growth in DEX and Kestone, the price could look cheap.
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.