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Ascensive Educare BSE Startup IPO review (Avoid)

Review By Dilip Davda on Dec 29, 2021

•    AEL is in the business of vocational training and skill development.
•    Its financial performance is almost static for the reported years.
•    Based on its latest performance, the issue is priced aggressively.
•    The company is in a highly competitive and fragmented segment.

ABOUT COMPANY:
Ascensive Educare Ltd. (AEL) is engaged in the business of training and skill development offering vocational training, and educational consulting in collaboration with Central Government, State Governments and various Industries and Industry Associations. The Company has been core to delivering high-quality training interventions that range from conducting training workshops to placement. Its course curriculum is NSFQ compliant and experienced trainers, including the ones certified by the Sector Skills Council, take care of all the training programs. 

AEL is an accredited NSDC training partner provider and offers nationally recognized qualifications and skill-sets that comply with industry standards. It provides the platform for the skill developments at the grassroots level to skill and re-skilled the workforce of India so that they can rightfully participate in this phase of growth of the nation. The Company is focused on working in the field of education and skill development and is committed to playing a valuable role in supporting the scaling-up process of rural livelihood. As of the filing of this offer documents, it had 105 employees on its payroll. 

ISSUE DETAILS/CAPITAL HISTORY:
To part finance its needs for working capital (Rs. 1.40 cr.) and general corporate purpose (Rs. 0.46 cr.)  AEL is coming out with a maiden IPO of 868000 equity shares of Rs. 10 each at a fixed price of Rs. 26 per share to mobilize Rs. 2.26 cr. The issue opens for subscription on December 30, 2021, and will close on January 04, 2022. Minimum application is to be made for 4000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on the BSE Startup SME platform. The issue constitutes 27.05% of the post issue paid-up capital of the company. It will spend Rs. 0.40 cr. for this IPO process. This indicates a fully structured process for the proposed IPO. 

The issue is solely lead managed by GYR Capital Advisors Pvt. Ltd. and Link Intime India Pvt. Ltd. is the registrar to the issue. Beeline Broking Ltd. is the market maker for this issue. 

AEL's entire equity is raised at par so far and has also given a bonus in the ratio of 8 for 10 in May 2020. The average cost of acquisition of shares by the promoters is Rs. 4.41 and Rs. 8.08 per share. 

Post issue AEL's current paid-up equity capital of Rs. 2.34 cr. will stand enhanced to Rs. 3.21 cr. Based on the IPO pricing, the company is looking for a market cap of Rs. 8.34 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, AEL has posted turnover/net profits of Rs. 9.18 cr. / Rs. 0.28 cr. (FY19), Rs. 9.61 cr. / Rs. 0.43 cr. (FY20) and Rs. 10.27 cr. / Rs. 0.44 cr. (FY21). For the first three months of FY22 ended on June 30, 2021, it has earned a net profit of Rs. 0.11 on a turnover of Rs. 3.21 cr. For all these years it has posted almost static top and bottom lines with marginal growth. 

For the last three fiscals, AEL has posted an average EPS of Rs.1.77 and an average RoNW of 15.74%. The issue is priced at a P/BV of 2.01 based on its NAV of Rs. 12.93 as of June 30, 2021, and at a P/BV of 1.58 based on its post-issue NAV of Rs. 16.47 per share. 

If we annualize FY22 earnings and attribute it to the fully diluted post issue equity capital, then the asking price is at a P/E of 18.98 making it an aggressively priced issue. Based on its post IPO equity base, it will have longer gestation for migration to the mainboard. 

COMPARISON WITH LISTED PEERS:
As per the offer document, AEL has no listed peers to compare with. 
    
DIVIDEND POLICY:
The company has not paid any dividends since incorporation. It will adopt a prudent dividend policy post listing based on its financial performance and future prospects. 

MERCHANT BANKER'S TRACK RECORDS:
After commencing the operations in this fiscal, this is the 2nd mandate from GYR Capital so far.  The only listing of Naap Book that opened at a premium of 4% and closed at par on the debt day is currently quoting at a discount of around 19% after marking a 52 weeks' low of Rs. 50.40 against the issue price of Rs. 74 per share. 


Conclusion / Investment Strategy

AEL is operating in a highly competitive and fragmented segment. There are many established players in this sector. Company’s financial performance is not in line with the asking price. Longer gestation for migration to the mainboard is a major hitch. There is no harm in ignoring this aggressively priced IPO.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Dec 29, 2021

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the past, SME IPOs drew the attention of investors across the board. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at own risk. The above information is based on information available as on date coupled with market perceptions. The Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com

Ascensive Educare IPO FAQs

  1. 1. Why Ascensive Educare IPO?

    The initial public offer (IPO) of Ascensive Educare Limited offers an early investment opportunity in Ascensive Educare Limited. A stock market investor can buy Ascensive Educare IPO shares by applying in IPO before Ascensive Educare Limited shares get listed at the stock exchanges. An investor could invest in Ascensive Educare IPO for short term listing gain or a long term.

  2. 2. How is Ascensive Educare IPO?

    Read the Ascensive Educare IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Ascensive Educare IPO what should investors do?

    Ascensive Educare IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Ascensive Educare IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is Ascensive Educare IPO good?

    Our recommendation for Ascensive Educare IPO is to avoid.

  5. 5. Is Ascensive Educare IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Ascensive Educare IPO.

  6. 6. When will Ascensive Educare IPO allotment status?

    The Ascensive Educare IPO allotment status will be available on or around Jan 7, 2022. The allotted shares will be credited in demat account by Jan 11, 2022. Visit Ascensive Educare IPO allotment status to check.

  7. 7. When will Ascensive Educare IPO list?

    The Ascensive Educare IPO will list on Wednesday, January 12, 2022, at BSE SME.