This CDGS stock recommends 1:1 bonus shares, revenue climbs 53% in Q2FY23

With a market worth of Rs. 453.02 crore, CL Educate Ltd. is a small-cap company that falls into the consumer discretionary goods and services (CDGS) industry. Over the course of its more than 25-year existence, CL Educate Ltd. has focused on many educational fields. The organisation has exam preparation facilities in the UAE in addition to more than 200 test preparation centres spanning over 100 locations in India. Today, the firm announced its financial results and the board of directors declared bonus shares in a 1:1 ratio.

The company has said in a stock exchange filing that “In continuation to our letter dated October 21, 2022, please be informed that the Board of Directors of the Company at its meeting held today i.e., November 02, 2022, inter alia, has: 1) Approved an increase in the Authorised Share Capital of the Company from Rs. 27,28,00,000 comprising of 5,45,60,000 Equity Shares of Rs. 5/- each to Rs. 40,00,00,000 comprising of 8,00,00,000 Equity Shares of Rs. 5/- each, and consequent Alteration to the Capital Clause of the Memorandum of Association of the Company, subject to the approval of Shareholders in compliance with the applicable laws. 2) Approved and recommended a Bonus Issue of Equity Shares in the Ratio of 1:1 i.e. 1 (One) Equity Share of Rs. 5/- (Rupees Five only) each be issued for every 1 (One) existing Equity Share of Rs. 5/- (Rupees Five only) each held by the Shareholders of the Company, as on the Record Date, subject to the approval of Shareholders in compliance with the applicable laws.”

“The Board of Directors of the Company at its meeting held on November 02, 2022 has approved and recommended a bonus issue of Equity shares in the Ratio of 1:1 i.e. (One) Equity Share of Rs. 5/- (Rs. Five only) each be issued for every 1 (one) existing Equity Share of Rs. 5/- (Rs. Five only) each held by the Shareholders of the Company, as on the Record Date, subject to the approval of Shareholders in the compliance with the applicable laws,” further added the company in a stock exchange filing.

According to CL Educate Ltd, its revenue increased by 53% to Rs. 161.6 crores for the fiscal year that ended on September 30, 2022, from Rs. 106.0 crore for the fiscal year that concluded on September 30, 2021. Total Comprehensive Income (TCI) climbed 177% from Rs. 6.2 crore in the period ended 30 September 2021 to Rs. 17.2 crore in the period ended 30 September 2022 (including Rs. 6.6 crore on account of a one-time exceptional gain).

“The Business is well on track to achieve pre-COVID levels of topline. While the re-opening of centers has bolstered the topline for the EdTech segment, the return of the physical events has improved the revenues for the MarTech segment. The management expects the EBITDA Margins to improve over the next few quarters which are suppressed partially due to investments in people, product & technology,” stated the company while announcing its results.

EBITDA for the firm grew by 24% YoY to Rs. 18.6 crore with a margin of 11.5% for the fiscal year that ended on September 30, 2022, as opposed to Rs. 15.0 crore for the fiscal year that ended on September 30, 2021. The company recorded a PAT (Total Comprehensive Income) of Rs. 17.2 crore for the quarter ending September 30, 2022, which included an exceptional income from the sale of an asset it had in Greater NOIDA, as opposed to Rs. 6.2 crore for the same period last year. 

In the quarter that ended on September 30, 2022, revenue grew by 28% QoQ to Rs. 90.8 crore from Rs. 70.8 crore in the quarter that ended on June 30, 2022. Following a Q1FY23 EBITDA of Rs. 9.0 crore, the firm reported an EBITDA of Rs. 9.6 crore in Q2FY23. Whereas the net profit was down from ₹12.6 crore to ₹4.6 crore in Q1FY23.

Commenting on the results, Mr. Arjun Wadhwa, CFO, CL Educate said "Our Monthly run rates are back on track to return to pre-COVID levels across both EdTech & MarTech business. Additionally, we have released cash from the sale of unproductive land assets which will be deployed towards accelerating business growth. We also continue on our journey towards shareholder wealth maximization through a bonus issue which will increase stock liquidity and generate greater retail investor participation."

The shares of CL Educate Ltd closed today at ₹157.90 apiece, up by 5.34% from the previous close of ₹149.90. In trade today the stock recorded a total volume of 197,338 shares compared to the 20-Day average volume of 75,060 shares. On a YTD basis, the stock has gained 37.42% so far in 2022.