Leading E-Learning Platform, Jaro Education Limited Files DRHP for Rs 570 Crore IPO

Mumbai-based Jaro Institute of Technology Management and Research Limited aka Jaro Education has filed its draft red herring prospectus (DRHP) with the market regulator, the Securities and Exchange Board of India ( SEBI ), for an initial public offering (IPO).

The IPO, with a face value of Re 10 per equity share, consists of a fresh issue of up to ₹170 crore and an offer for sale of ₹400 crore by the promoter-selling shareholder, Sanjay Namdeo Salunkhe.

The company, in consultation with the book-running lead managers, may consider a pre-IPO placement, aggregating up to Rs 34 crores prior to filing of the Red Herring Prospectus. If such placement is completed, the fresh issue size will be reduced.

Jaro Education proposes to utilize Rs. 81 cr from the Net Proceeds for marketing, brand building and advertising activities and Rs 48 crore for Prepayment or scheduled re-payment of a portion of certain outstanding borrowings availed by the Company and general corporate purposes

The Offer is being made through the book-building process, wherein not more than 50% of the net offer shall be available for allocation on a proportionate basis to qualified institutional buyers, not less than 15% of the net offer shall be available for allocation to non-institutional bidders, and not less than 35% of the net offer shall be available for allocation to retail individual bidders.

An early mover in the online higher education and upskilling space, Jaro Education was established in 2009 by Namdeo Salunkhe, the CMD and a first-generation entrepreneur with over 17 years of experience in the education sector. He is supported by Ranjita Raman, the CEO and whole-time director who has 15+ years’ experience in the education sector.

The institute delivers personalized, technology-driven degree programs and certification programs in collaboration with its Partner Institutions to students as well as C-Suite personnel

As per the Technopack Report in its DRHP, the bootstrapped institute is one of India’s leading online higher education and upskilling platform companies, in terms of EBIDTA, EBIDTA Margin, PAT and PAT Margin, Return on Equity ("ROE”) and Return on Capital Employed ("ROCE”) as of March 31, 2023

As on 31st March 2024, Jaro Education has over 22 offices-cum-learning centres across major cities for offline learning, apart from 15 immersive tech studio set-ups in the campuses of various IIMs, and cater to a total of 34 Partner Institutions such as IITs, IIMs and premier global institutions such as Swiss School of Management and Rotman School of Management, University of Toronto.

Its 239 course offerings and programs include Doctor of Business Administration (“D.B.A.”), Master of Business Administration (“M.B.A.”), Master of Commerce (“M.Com.”), Master of Arts (“M.A.), Post Graduate Diploma in Management (“P.G.D.M.”), Master of Computer Applications (“M.C.A.”), Bachelor of Commerce (“B.Com.”), Bachelor of Computer Applications (“BCA”) and other degree programs in partnership with 13 universities in India, out of which 9 universities have been ranked in the top 100 by the National Institutional Ranking Framework

Additionally, it provides online, hybrid, and in-person certification courses in areas such as management, fintech, data science, business analytics, design thinking and digital marketing, in partnership with 21 institutes in India, including 7 IIMs and 6 IITs, and 2 other institutions which have been ranked in the top 100 by NIRF

Its enrolments between FY22 and FY24 have grown at a CAGR of 16.7% and 58.3% respectively. 68% of its enrolment share for the fiscal ended March 31, 2024, is driven by marketing, brand building and advertising that is supported by business intelligence, insights on pricing, geographical expansion, program positioning and content delivery. Between FY23 and FY24 it was a 32%, 33% and 53% CAGR growth in its Degree, Masters's Degree and Certificate Courses, it’s a one-stop solution for a university looking to offer online, hybrid and in-person degree programs and certification courses

Jaro’s business model has a high degree of predictability of revenue given its long-standing relationships with its partners. Its top 5 partners contributed 69.13% of its revenue from operations in FY 24 as compared to 86.15% in FY22. Its operational revenue grew 1.4 times to Rs 122.1 crore in FY 2023, up from Rs 84.5 crore in FY 2022. In FY 2024, the organization reported an operational revenue of Rs 199 crore, a 63% increase compared to FY 2023.

As of March 31, 2023, Jaro Education recorded the second-highest EBITDA margin of 21.0% among identified peers. Furthermore, the company achieved a positive EBITDA margin of 33.2% for FY 2024, with an EBITDA of Rs 66.2 crore.

The online higher education degree program market in India was valued at ₹ 0.30 lakh million in Fiscal 2023, and is projected to grow at a significant pace over the next 5 years, to reach ₹ 1.02 lakh million by Fiscal 2028, exhibiting a CAGR of 27.7% between Fiscal 2023 to Fiscal 2028. (Source: Technopak Report). Further, the online skilling and certification course market size in India was valued at ₹ 1.02 lakh million in Fiscal 2023 and is projected to grow at a CAGR of 25.1% over the next 5 years, to reach a market size of ₹ 3.13 lakh million by Fiscal 2028 (Source: Technopak Report).

Nuvama Wealth Management Limited, Motilal Oswal Investment Advisors Limited and Systematix Corporate Services Limited are the book-running lead managers, and Bigshare Services Private Limited is the registrar to the offer.