Kuberan Global BSE Startup IPO review (Avoid)

Review By Dilip Davda on Apr 10, 2021

•    KGESL is engaged in TEST PREP online training segment.
•    While it posted inconsistency in top lines, the bottom line marked declining trends.
•    Higher profit for 7M-FY21 appears pre-IPO cooked up performance.
•    The issue is aggressively priced; one may ignore it.

ABOUT COMPANY:
Kuberan Global Edu Solutions Ltd. (KGESL) is engaged in TEST PREP segment including Banking courses, Master of Business Administration Entrance Exams, Staff Selection Commission (SSC), Life Insurance Corporation of India (LIC), Accounting and Professional Courses like Chartered Accountant (CA), Certified Management Accountant (CMA), Company Secretary (CS) and it is expanding to include various other TEST PREP courses under its belt. The company also provides custom Courses and has capabilities to provide customized training to the corporates, government and educational organizations. The company markets and Train students on various courses and has unique courses on wealth management and capital markets to the Investing community.

The Company provides services through online teaching and classroom which allows a student to engage in self-paced learning. It also offers short term courses and tests series-based courses which have been designed specifically to provide education in a simple and lucid manner.

ISSUE DETAILS/CAPITAL HISTORY:
To part finance its plans for digitalizing banking course through online mode by using IT (Rs. 0.66 cr.) and general corpus fund needs (Rs. 0.25 cr.), KGESL is coming out with a maiden IPO of 558000 equity shares of Rs. 10 each at a fixed price of Rs. 20 per share to mobilize Rs. 1.12 cr. The issue opens for subscription on April 20, 2021, and will close on April 27, 2021. Minimum application is to be made for 6000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on the BSE Startup platform. The issue constitutes 26.49% of the post issue paid-up capital of the company. The company did the pre-IPO placement of 40000 shares at Rs. 20 each in the month of September 2020. KGESL is spending Rs. 0.21 cr. for this IPO process.

The issue is solely lead managed by Fedex Securities Pvt. Ltd., Bigshare Services Pvt. Ltd. is the registrar to the issue and Rikhav Securities Ltd. is the market maker for this IPO.

Having issued/converted initial equity at par value, it has converted/issued further equity in the price range of Rs. 14.77 to Rs. 20 per share between January 2019 and September 2020. It has also issued bonus shares in the ratio of 0.474 for every 1 share held in January 2019. The average cost of acquisition of shares by the promoters is Rs. 9.50 per share.

Post issue, KGESL's current paid-up capital of Rs. 1.55 cr., will stand enhanced to Rs. 2.11 cr. At the IPO price, the company is looking for a market cap of Rs. 4.21 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, the company has posted a total income/net profit of Rs. 0.83 cr. / Rs. 0.18 cr. (FY18), Rs. 0.99 cr. / Rs. 0.03 cr. (FY19), Rs. 0.91 cr. / Rs. 0.02 cr. (FY20). For the first seven months ended on October 31, 2020, it has posted a net profit of Rs. 0.09 cr. on total income of Rs. 0.63 cr. The company posted inconsistency in top-line while declining trends for the bottom line for the last three fiscals, However, it has posted higher net for first seven months of FY21 that raises eyebrows.

For the last three fiscals, KGESL has posted an average EPS of Rs. 0.43 and an average RoNW of 4.40%. The issue is priced at a P/BV of 1.83 based on its NAV of Rs. 10.91 per share as of October 31, 2020, and at a P/BV of 1.50 based on its post-issue NAV of Rs. 13.32 per share.

If we annualize the latest earnings and attribute it to fully diluted post issue equity, then the asking price is at a P/E of 28. Thus it is priced aggressively.

DIVIDEND POLICY:
The company has not paid any dividend since its inception. It will follow prudent dividend policy post listing based on performance and future prospects of the company.

COMPARISION WITH LISTED PEERS:
As per offer documents, KGESL has shown Career Point and CL Educate as its listed peers which are currently trading at a P/E of around 16.63 and 00 (as of April 09, 2021). Though they are not truly comparable on an apple to apple basis.

MERCHANT BANKER'S TRACK RECORDS:
This is the 12th mandate from its stable in the last four fiscals (including the ongoing one). Out of the last 9 listings, 1 opened at discount, 2 issues opened at par and the rest with a premium ranging from 0.16% to 56.52%. Thus it has an average track record.


Conclusion / Investment Strategy

The financial data is on a minuscule level with scanty profits. Based on the last three fiscals average EPS it is priced at a P/E of 46 and on the basis of FY20 earnings, it is at a P/E of 1000. If we consider super-profits for 7M-FY21 it is at a P/E of 28. There is no harm in giving this aggressively priced IPO a miss.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Apr 10, 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

Kuberan Global Edu Solutions IPO FAQs

  1. 1. Why Kuberan Global Edu Solutions IPO?

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

  2. 2. How is Kuberan Global Edu Solutions IPO?

    Read the Kuberan Global Edu Solutions IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Kuberan Global Edu Solutions IPO what should investors do?

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

  4. 4. Is Kuberan Global Edu Solutions IPO good?

    Our recommendation for Kuberan Global Edu Solutions IPO is to avoid.

  5. 5. Is Kuberan Global Edu Solutions IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Kuberan Global Edu Solutions IPO.

  6. 6. When will Kuberan Global Edu Solutions IPO allotment status?

    The Kuberan Global Edu Solutions IPO allotment status will be available on or around Apr 30, 2021. The allotted shares will be credited in demat account by May 4, 2021. Visit Kuberan Global Edu Solutions IPO allotment status to check.

  7. 7. When will Kuberan Global Edu Solutions IPO list?

    The Kuberan Global Edu Solutions IPO will list on Wednesday, May 5, 2021, at BSE SME.








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