Shanti Educational Initiatives BSE SME IPO Review (Avoid)

Review By Dilip Davda on May 31, 2016

Shanti Educational Initiatives Ltd (SEIL) was originally incorporated as Chiripal Enterprises Limited on May 12, 1988.  The name of Company was changed from Chiripal Enterprises Limited to Shanti Educational Initiatives Limited on April 16, 2010. Chiripal Group is promoted by experienced veterans with proven track records. Today, the group is engaged in diversified businesses in the fields of textile, spinning, weaving, knitting, fabric processing, chemicals, infrastructure, BOPP films etc. and offering employment to approximately 20,000 people associated directly or indirectly with the Group.

SIEL is primarily engaged in the business of providing educational support services to preschools, K-12 and premium category preschools in India. Three business units of the company are as under:

Shanti Juniors: With 154 franchised preschools under the brand name of “Shanti Juniors” spread over western, southern and northern region in India, we are rapidly growing popularity in preschool segment.

Shanti Asiatic School: Under the brand name of “Shanti Asiatic School” there are 6 K-12 schools having over approximately 3600 students.

Shanti's Hopskotch: There are 5 premium category preschools to serve the niche segment which aspire for premium quality education, ambience and learning environment for children under the brand name of “Shanti’s Hopskotch”

 SEIL’s business model is focused on operations through franchisee for preschools and K-12 schools, wherein we enter into agreement with franchisee for a fixed tenure under standard conditions with varied date of commencements and receive a fixed non-refundable onetime franchise fees and a monthly/quarterly/annually royalty on recurring basis for use of it’s brand and teaching methodologies from the franchisee. Apart from Gujarat Company’s presence is also concentrated in the states of Rajasthan, Bihar, Maharashtra, Karnataka, and Tamil Nadu.

The company is coming out with its maiden IPO of 4400000 equity share of Rs 10 each at a fixed price of Rs. 90 per share to mobilize Rs. 39.60 crore.  Issue consists of 3600000 share by way of offer for sale from existing stakeholders and 800000 shares as a fresh issue. To finance its school building project at Vastral in Gujarat and meet general corpus funds needs, company will use funds received from fresh equity issue.  Issue opens for subscription on 01.06.16 and will close on 06.06.16. Minimum application is to be made for 1600 shares and in multiples thereon, thereafter.

After initial contribution at par, it issued shares at a price of Rs. 100 in March 2009. Then again it issued further equity at par during 2011 and 2012. In December 2015 it issued few shares at a price of Rs. 90 per share. Post IPO, it’s paid up equity capital of Rs. 15.30 crore will stand enhanced to Rs. 16.10 crore. Post allotment shares will be listed on BSE SME. Issue is solely managed by Guiness Corporate Advisors Pvt Ltd and Link Intime India Pvt Ltd is the registrar to the issue.

On performance front, for last three fiscals the company has posted turnover and net profit of Rs. 6.49 cr. / Rs. 0.10 cr. (FY14), Rs. 6.67 cr. / Rs. 0.64 cr. (FY15), Rs. 9.17 cr. / Rs. 2.19 cr. (FY16). If we attribute latest earnings on fully diluted equity post IPO then asking price is at a P/E of 66 plus. Its peers are trading at a P/E ranging from 5 to 61 and thus issue appears to be highly priced. 

On merchant banker’s front, this is 20th mandate from it and past mandates have mixed trends.


Conclusion / Investment Strategy

As the issue is aggressively priced, only risks aver investors with cash surplus may consider investment for long term.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on May 31, 2016

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

Shanti Educational IPO FAQs

  1. 1. Why Shanti Educational IPO?

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

  2. 2. How is Shanti Educational IPO?

    Read the Shanti Educational IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Shanti Educational IPO what should investors do?

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

  4. 4. Is Shanti Educational IPO good?

    Our recommendation for Shanti Educational IPO is to avoid.

  5. 5. Is Shanti Educational IPO worth Investing?

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

  6. 6. When will Shanti Educational IPO allotment status?

    The Shanti Educational IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Shanti Educational IPO allotment status to check.

  7. 7. When will Shanti Educational IPO list?

    The Shanti Educational IPO will list on Tuesday, June 14, 2016, at BSE SME.








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