Jaro Institute IPO — Should You Bid? Read DRChoksey's Analysis For Key Issue Details

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DRChoksey Report

Jaro Institute of Technology Management and Research Ltd. will launch its initial public offering on Sept. 23 and concludes on Sept. 25. The company has set the price band at Rs 846 to Rs 890 per equity share.

The Rs 450-crore IPO is a combination of a fresh issue of Rs 170 crore and an offer for sale of 0.31 crore shares aggregating to Rs 280 crore.

The allotment of shares to IPO investors will be on Sept. 26.

Jaro Institute will list on the BSE and NSE on Sept. 30.

Nuvama Wealth Management Ltd., Motilal Oswal Investment Advisors Ltd., Systematix Corporate Services Ltd., Bigshare Services Pvt. Ltd. are the book-running lead managers for the public issue.

Objects of the Offer

• Marketing, brand building and advertising activities.

• Prepayment or scheduled re-payment of a portion of certain outstanding borrowings availed by our company.

• General corporate purposes.

Strategies:

• Market share expansion through a broader portfolio of offerings and an extensive network of partnerships.

• Continue marketing, brand building, and advertising activities, diversify online presence, and increase Learner enrolments and scalability of business.

• Expand its geographical footprint by setting up additional offices, learning centers, and immersive studios in locations across India and increasing outreach to Learners.

• Continue to enhance digital capabilities and platforms with a focus on enhancing client satisfaction, operational efficiency, and cost optimization.

• Leverage insights from free course offerings to create freemium offerings and introduce a dedicated counselling platform for career guidance.

Strengths:

• Market Leadership and Strong Brand: The company is a leading player in online higher education and upskilling with a strong brand and pan-India presence, supported by 16 years of sector expertise and its early-mover advantage since 2009.

• Robust Partner Network and Diverse Offerings: It has a robust partner network of 36 institutions, including seven IIMs and seven IITs, and offers 268 programs, 70 of which are exclusive.

• Predictable Revenue from Long-Term Relationships: The company enjoys predictable revenue through long-term relationships with top partners lasting up to seven years.

• Experienced Senior Management Team: The business is led by an experienced senior management team, including founder Sanjay Namdeo Salunkhe, who has over 17 years of expertise in the education sector.

Outlook:

Jaro Institute of Technology Management and Research (Jaro Education), is India’s one of the ed-tech platform, incorporated with the aim of bridging the gap between academic institutions and learners through technology-enabled education solutions. Jaro Education facilitates a broad portfolio of programs offered by its partner institutions, covering both degree programs and certification courses.

As of March 31, 2025, its portfolio comprised 268 distinct programs. The Company is uniquely positioned in the industry, as it among the very few of the players, which provide bundle services including counselling and digital platform equipped with managing the entire learner journey, allowing academic institutions to only focus on academic quality and curriculum delivery.

Its net revenue has witnessed a growth of 26.7% CAGR, while its Ebitda has grown at 32.4% CAGR over FY23-25. Though its initial issue the Company plans to raise Rs 4.5 billion split across Rs 1.7 billiin through fresh issue and Rs 2.8 billion OFS. Fresh issue is to be utilized for funding Rs 0.8 billion for marketing, ~Rs 0.5 billion for repayment of borrowings ad rest for general corporate purpose.

The Company aims to partner with additional institutes in India and internationally, to expand its footprint and onboarding more learners. Jaro’s Initial issue is priced at 38.2x FY25 P/E, while most of its privately held peers, were not profitable for the most recent years.

Although, the issue being priced at ~38.0x, we believe the stock is attractively priced, driven by its strong revenue growth, healthy margin and return profile.

We expect the company to perform well in terms of profitability, with increase in enrolments. We assign a “Subscribe” rating to the issue.

Risks:

• Reliance on Partner Institutions for academic content and online adoption exposes the business to risks if their participation or adoption declines.

• About 62.40% of revenue in FY25 came from the top 5 partners; losing or reducing business with them could severely impact operations.

• Around 73% of revenue and 33.33% of partners are in Western India, making results vulnerable to regional economic and demographic changes.

• Persistent negative cash flows in FY23–FY25 due to upfront expenses and staggered revenue collection may pressure liquidity.

• Dependence on external LMS providers means disruptions or failures could damage reputation and revenues.

• Partners may market directly or shift to competitors, reducing fee share and raising acquisition costs.

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