WAGONS LEARNING SME IPO Analysis: Should You Invest? -

Table of Contents

Introduction

Wagons Learning Limited, a Pune-based company in the edtech sector, is launching its SME IPO to raise ₹38.38 crore. The IPO, opening on May 2, 2025, and closing on May 6, 2025, is priced at ₹78–₹82 per share and will list on the BSE SME platform on May 9, 2025. Specializing in corporate training, digital learning, and skill development solutions, the company operates a B2B model, serving industries like automotive, banking, and healthcare. This detailed analysis examines the IPO’s financials, valuation, risks, and subscription status to provide an investment recommendation for the WAGONS LEARNING IPO.

IPO Overview

The IPO comprises a fresh issue of 30.80 lakh shares (₹25.26 crore) and an offer for sale (OFS) of 16 lakh shares (₹13.12 crore), totaling ₹38.38 crore. The minimum lot size is 1,600 shares, requiring retail investors to invest ₹1,31,200 at the upper price band of ₹82. High-net-worth individuals (HNIs) must apply for at least 3,200 shares (₹2,62,400). The share allocation is 50% for retail investors, 38.01% for non-institutional investors (NIIs), and 11.99% for qualified institutional buyers (QIBs). Khandwala Securities Limited is the book-running lead manager, Cameo Corporate Services Limited is the registrar, and Rikhav Securities Limited is the market maker.

Financial Performance

Wagons Learning has shown significant financial growth. Revenue increased from ₹9.79 crore in FY22 to ₹33.51 crore in FY24, reaching ₹36.05 crore (annualized) in Dec-24. Profit after tax (PAT) grew from ₹0.09 crore in FY22 to ₹5.61 crore in FY24, and ₹6.04 crore in Dec-24. Margins have improved notably, with EBITDA margin rising from 2.55% in FY22 to 25.54% in Dec-24, and PAT margin from 0.92% to 16.76%. The company’s net worth stood at ₹19.20 crore in Dec-24, with a debt-to-equity ratio of 0.54, indicating moderate leverage.

Financial Data Table

Period	Revenue (₹ Cr.)	EBITDA (₹ Cr.)	PAT (₹ Cr.)	Assets (₹ Cr.)	Net Worth (₹ Cr.)	Total Debt (₹ Cr.)
Dec-24	36.05	9.21	6.04	33.02	19.20	10.45
FY24	33.51	8.13	5.61	21.41	13.66	4.23
FY23	16.10	1.20	0.70	8.53	4.80	1.67
FY22	9.79	0.25	0.09	6.46	4.09	0.95

Key Performance Indicators (KPIs)

Metric	Dec-24	FY24	FY23	FY22
EBITDA Margin (%)	25.54	24.26	7.45	2.55
PAT Margin (%)	16.76	16.74	4.35	0.92
EPS (₹)	4.43	4.48	0.76	0.13
ROE (%)	28.85	41.07	14.58	2.20
ROCE (%)	27.33	45.27	17.74	4.69
ROA (%)	16.78	26.20	8.21	1.39
Debt to Equity	0.54	0.31	0.35	0.23

Valuation Analysis

The IPO is valued at a P/E ratio of 21.23x, slightly above the sector average of 19.58x, suggesting potential overvaluation. The EV/EBITDA ratio of 14.85x is reasonable for a growing edtech company, and the price-to-book value (P/BV) ratio is 2.22x. The market capitalization post-IPO is ₹127.92 crore, reflecting a significant premium over its net worth of ₹19.20 crore.

Use of Proceeds

The proceeds from the fresh issue will be allocated as follows:

Working Capital: To support operational needs.
Prepayment/Repayment of Borrowings: To reduce debt.
General Corporate Purposes: For miscellaneous business expenses.

Management and Promoter Details

Founded in 2013, Wagons Learning is led by promoters who hold 73.24% of the shares pre-IPO, which will dilute to 48.52% post-IPO. The company employs a lean team and has trained over 550,000 professionals through classroom, virtual, and digital modules, as noted in LiveMint.

Subscription Status

On the first day of subscription (May 2, 2025), the IPO was subscribed only 0.02x, with retail investors at 0.04x, NIIs at 0.01x, and QIBs at 0x, as reported by IPOWatch. This low subscription indicates weak investor interest, which could impact listing performance.

Grey Market Premium (GMP)

The GMP for the IPO is currently ₹0, as per InvestorGain, suggesting no premium in the unofficial market and potentially signaling a flat or negative listing.

Risk Factors

Investors should consider the following risks:

High Valuation: The P/E ratio of 21.23x is above the sector average, indicating potential overvaluation.
Low Subscription: The 0.02x subscription on Day 1 reflects limited investor confidence.
SME IPO Risks: SME IPOs are inherently riskier due to lower liquidity and higher volatility.
Edtech Sector Volatility: The edtech sector has faced challenges, which could impact future growth.
Moderate Leverage: A debt-to-equity ratio of 0.54 suggests manageable but notable debt.

Peer Comparison

While specific peer data is limited, the sector average P/E ratio of 19.58x provides context. Wagons Learning’s P/E of 21.23x is higher, but its strong growth and margins may justify a premium for some investors. The company’s focus on B2B services differentiates it from consumer-facing edtech firms.

Investment Recommendation

Given the high valuation, low subscription, and risks associated with SME IPOs, it seems prudent to avoid the WAGONS LEARNING SME IPO. The P/E ratio of 21.23x exceeds the sector average, and the GMP of ₹0 suggests limited listing gains. The high minimum investment of ₹1,31,200 further limits its appeal for retail investors. However, high-risk investors with a strong belief in the edtech sector and Wagons Learning’s B2B model might consider applying after thorough due diligence. The company’s financial growth is promising, but current market sentiment and valuation concerns outweigh the positives.

Conclusion

Wagons Learning’s SME IPO offers exposure to a growing edtech company with strong financials, but its high valuation, low subscription, and SME risks make it a cautious investment. The edtech sector’s volatility and the high minimum investment further tilt the balance toward avoidance. Investors should carefully weigh these factors and consider alternative opportunities with better risk-reward profiles before deciding on the WAGONS LEARNING IPO.

Key Citations

Disclaimer

This blog is for educational purposes only and is not a stock recommendation. Always consult your financial advisor and conduct your own research before making any investment decisions.