Jaro Institute IPO review

•    The company is one of India’s leading online higher education and upskilling platform.
•    It has 36 partner institutions consisting of renowned management and other high degree education universities.
•    The company posted steady growth in its top and bottom lines for the reported periods.
•    Based on its recent financial data, the IPO appears reasonably priced.
•    Investors may park funds for medium to long term, this counter may catch fancy as first mover post listing.

ABOUT COMPANY:
Jaro Institute of Technology Management & Research Ltd. (JITMRL) is one of India’s online higher education and upskilling platform companies (Source: Technopak Report). It markets and facilitates delivery of a diversified range of online degree programs including D.B.A, MBA, M.Com., M.A., PGDM, M.C.A., M.Sc., B.Com., BCA, as well as cross-disciplinary certification courses, in partnership with 36 Partner Institutions, including 16 Tier-1 universities and institutions (which include 7 IIMs and 7 IITs and 15 Tier-2 universities and institutions as of March 31, 2025.

With a pan-India presence of over 22 offices-cum-learning centres across major cities for offline learning, apart from 17 immersive tech studio set-ups in the campuses of various IIMs, the company caters to a total of 36 Partner Institutions, as on March 31, 2025. Its roster of 36 partnerships comprises premier Partner Institutions both in India and globally, including IITs, IIMs and premier global institutions such as Swiss School of Management and Rotman School of Management, University of Toronto, and top corporates, out of which 29 institutions have earned the distinction of being ranked among the top 100 partners in their respective streams by NIRF, as of 2025 (Source: Technopak Report). It has established strong and lasting collaborations with Partner Institutions, as it has consistently facilitated delivery of quality degree programs, certification courses and admission related services over a long period of time. 

It has also received appreciation from Symbiosis International (Deemed University), IITs and IIMs for supporting them in technology and infrastructure support for facilitation of lecture delivery, marketing and promotion and student acquisitions and support. The marketing process and outreach that it undertakes on behalf of Partner Institutions for their degree programs and certification courses, which forms an integral service offered to Partner Institutions for expanding their outreach to Learners, entails preparation of marketing materials and collaterals in line with the PDS and goals of the degree programs and certification courses, multi-channel publicity campaigns and utilizing tools at its disposal such as search engine optimization and public relations strategies which are customized for the degree programs and certification courses.

The strength of its relationships with Partner Institutions is evidenced by a strong, growing number of Tier-1 university partners and market-leading position in India and pan-India presence with on-campus studios and off-campus learning centres at premier universities. The positive outcomes and exceptional performance throughout relationships, has led prestigious institutions, such as IIMs, IITs, and other top-tier universities and institutions, to opt for renewal of their contractual arrangements with the company, demonstrating the predictability and recurring nature of business and long-standing client relationships. Out of the 268 degree programs and certification courses, which are offered by Partner Institutions and which it markets and facilitates delivery. As of March 31, 2025, it has added 69 new degree programs and certification courses with existing partners since the beginning of relationships with them.

JITMRL markets and facilitates delivery of a diversified range of online degree programs including D.B.A, MBA, M.Com., M.A., PGDM, M.C.A., M.Sc., B.Com., BCA, as well as cross-disciplinary certification courses, in partnership with 36 Partner Institutions, including 16 Tier-1 universities and institutions (which include 7 IIMs and 7 IITs) and 15 Tier-2 universities and institutions as of March 31, 2025. As of the said date, it had 860 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route combo IPO of equity shares issue worth Rs. 450 cr. (approx. 5056180 equity shares at the upper cap), comprising fresh equity shares issue worth Rs. 170 cr. (approx. 1910112 shares at the upper cap), and an Offer for Sale (OFS) worth Rs. 280 cr. (approx. 3146068 equity shares at the upper cap). The company has announced a price band of Rs. 846 – Rs. 890 per equity shares of Rs. 10 each. The issue opens for subscription on September 23, 2025, and will close on September 25, 2025. The minimum application to be made is for 16 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. The issue constitutes 22.82% of the post-IPO paid-up equity capital. From the net proceeds of the fresh equity issue, it will utilize Rs. 81.00 cr. for marketing, brand building and advertising activities, Rs. 45.00 cr. for prepayment/repayment of certain borrowings, and the rest for general corporate purposes.

The joint Book Running Lead Managers (BRLMs) to this issue are Nuvama Wealth Management Ltd., Motilal Oswal Investment Advisors Ltd., and Systematix Corporate Services Ltd., while Bigshare Services Pvt. Ltd., is the registrar to the issue. Motilal Oswal Financial Services Ltd., Nuvama Wealth Management Ltd., and Systematix Shares and Stocks (India) Ltd. are the syndicate members.

Having issued initial equity shares at par, the company issued further equity shares in the price range of Rs. 31.77 – Rs. 50 per share between September 2013, and May 2025. It has also issued bonus shares in the ratio of 14 for 1 in January 2017, and 1 for 3 in June as well as in July-November 2024/ May-June 2025 (for the residual portion of eligible stakeholders). The average cost of acquisition of shares by the promoters/selling stakeholders is Rs. Negligible, and Rs. 0.75 per share. 

Post-IPO, its current paid-up equity capital of Rs. 20.25 cr. will stand enhanced to Rs. 22.16 cr. Based on the upper cap of the IPO price band, the company is looking for a market cap of Rs. 1971.91 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit, of Rs. 124.59 cr. / Rs. 11.42 cr. (FY23 – consolidated), Rs. 202.57 cr. / Rs. 38.01 cr. (FY24 – consolidated), and Rs. 254.02 cr. / Rs. 51.67 cr. (FY25 - standalone). It posted growth in its top and bottom lines for the reported periods on consolidated/standalone basis.

According to the management, the institution is gearing for a fast forward mode as indicated by the trends of its performance so far. Its offering is widening and many top-ranking universities are joining the bandwagon, that augurs well. 

For the last three fiscals, the company has posted an average EPS of Rs. 20.03 (basic) and an average RoNW of 28.32%. The issue is priced at a P/BV of 10.50 based on its NAV of Rs. 84.77 as of March 31, 2025, and at a P/BV of 5.77 based on its post-IPO NAV of Rs. 154.15 per share (at the upper cap).

If we attribute FY25 earnings to its post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of 38.16. Based on FY24 earnings, the P/E stands at 50.68. Thus, the issue appears reasonably priced. 

The company has shown PAT margins of 9.35% (FY23), 18.75% (FY24), 20.34% (FY25), and RoCE margins of 19.12%, 40.90%, 37.38%, respectively for the referred periods.

DIVIDEND POLICY:
The company paid a dividend of 10% in FY25 for the shareholding of 15169304 shares as of May 28, 2024. It has already adopted a dividend policy in July 2024, based on its financial performance and future prospects.

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has no listed peers to compare with.

MERCHANT BANKER’S TRACK RECORD:
The three BRLMs associated with the offer have handled 46 pubic issues in the past three fiscals, out of which 14 issues closed below the offer price on the listing date.