Byju’s IPO

Last Updated on December 26, 2023 by BFSLTeam BFSLTeam

Byju’s is one of the most important edtech startups in the world. It has decided to launch its IPO (Initial Public Offering) of its test preparatory arm Aakash Education Services Limited (AESL). The IPO is expected to provide sufficient capital to boost AESL’s infrastructure and extend high-quality education to more students. 

According to a study conducted by Ken Research, test-prep market revenues are expected to grow at a compound growth annual rate (CAGR) of 9.3% during FY2020 – FY2025. The category of online test preparation is expected to grow at a CAGR of 42.3% during the same period.

In this blog, we’ll explore more details about Byju’s upcoming IPO. 

About Byju’s 

Byju’s started with a vision to create and make high-quality educational content accessible for all students, irrespective of their social strata. It sought to build an active community of self-learners who can learn at their convenience. 

The seed of this vision was planted when the founder Byju Raveendran saw that his offline classes at stadiums were packed to the core. He was an engineer by training and became an ed-tech entrepreneur by choice after establishing Think & Learn Private Limited in 2011. It’s the parent company of Byju’s. 

The flagship product of this entrepreneurial venture was BYJU’s-The Learning App. It was downloaded by 2 million people within the first 3 months of its roll-out and transformed the way Indian students learnt.

The USP of Byju’s is that it makes use of technology to cater to the needs of each of its students. The company has plans to come up with more learning tools that combine the benefits of technology, interactive content and customised learning methodologies.

Also Read: How does an IPO work?

Why Should You Invest in Byju’s IPO? 

Byju’s is one of the most important ed-tech platforms in the digital learning space in India. It has attracted a lot of attention since its inception and has proven its value proposition over 10 years. With a large number of subscribers and smart usage of technology, the company can grow immensely. 

IPO Details

As per an announcement by the company’s board, Byju’s has plans to launch an IPO for its tutoring division, Aakash Educational Services Limited. Previously, the company had plans to launch an IPO in 2023; this is now postponed to the middle of 2024. 

The main objectives behind launching the IPO are noted below: 

• Raising funds for working capital requirements 
• Fulfilling goals of growth and expansion
• Building a corpus for corporate purposes 
• Fulfilling the expenses of share issuance 

The board of directors at Byju’s has given official approval to launch an IPO. Currently, they are in talks with several investment banks such as Citi Bank and Goldman Sachs regarding its valuation for its public issue. According to the company’s official statement, it has prepared a timeline for its upcoming IPO and will soon appoint merchant bankers to carry it out.

Byju’s had acquired AESL in April 2021; since then, Aakash’s profits tripled in the next two years. As of FY2022-23, the company’s revenue is set to reach a target of Rs. 4000 crore and an EBITDA of Rs. 900 crore. Through its upcoming IPO, Byju’s plans to bolster its subsidiary’s infrastructure and increase its reach.

Also Read: IPO investment strategy: Tips for investing in an IPO

Strengths 

Byju’s key strengths are discussed as follows: 

• Learners can choose from a wide range of learning materials and online classes in various formats including theories, visuals and stories. 
• An important benefit is that people can choose from a wide range of regional languages to learn the lesson of their choice. 
• Their App is quite popular among students and enjoys high engagement. 
• Its user-friendly interface and study solutions facilitate higher student engagement and enhance their learning experience.
• As internet access continues to grow in India, more students will likely want access to digital learning solutions. This puts Byju’s in a favourable position.

Risks 

Check the risks involved with investing in Byju’s IPO: 

• The company struggles with inventory management. Moreover, its RoI (Return on Investment is quite low) as its expenses are quite high. 
• Competition is quite high as new ed-tech start-ups are coming into the frame quite quickly. 
• Byju’s has faced several adverse events over the past year, including layoffs, valuation cuts and debt-related problems.

Also Read: What is an oversubscription in an IPO?

Summary

While it’s true that Byju’s is a leading player in the ed-tech field of India, it’s highly advisable for investors to evaluate the scope and limitations of its upcoming IPO before subscribing. A point to consider, here, is that new entrants in the field can easily imitate Byju’s business model. However, the company has a unique appeal that is difficult to replicate with others. Its unique market position makes it a lucrative investment option to consider.