Moxsh Overseas Educon coming with an IPO to raise Rs 10.42 crore

Moxsh Overseas Educon

• Moxsh Overseas Educon is coming out with an initial public offering (IPO) of 6,80,800 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 153 per equity share.
• The issue will open for subscription on December 21, 2022 and will close on December 23, 2022.
• The shares will be listed on NSE Emerge Platform.
• The share is priced 15.30 times higher to its face value of Rs 10.
• Book running lead manager to the issue is Fedex Securities.
• Compliance Officer for the issue is Shivam Kumar Urmaliya.

Profile of the company

Moxsh Overseas Educon is an Edu-Medi Tech company engaged in the business of offering diverse and cohesive learning solutions, counselling and mobility services to students aspiring to pursue medical studies (MBBS) in India or abroad under its brand “MOKSH” (‘student mobility services’). Under its student mobility services, it also provides advisory to students for their medical career planning and execution. The company is a digitally native, technology led business, providing online learning program (test preparation) for medical entrance examinations, NEET-UG and for medicos (i.e. medical aspirants or graduates of a medical school) to appear for medical licensing examination, such as USMLE, PLAB, DHA, NeXT, FMGE etc, under its brand “MOKSH Academy” (healthcare academy).

Based in Mumbai, as of August 31, 2022, the company has presence across 23 touch points in India, of which it has presence in 18 cities through franchisee arrangements and with its registered and branch offices in 5 cities viz Mumbai, Pune, Delhi, Bhopal and Ahmedabad. The company’s present service offerings can be categorized into student mobility services and healthcare academy. The company has integrated different services throughout the journey of a student aspiring to pursue medical studies from entering into UG level course till settling down as a practicing physician or pursuing PG program (Specialist).

Proceed is being used for:

• Meeting working capital requirements
• Expenditure to enhance visibility and awareness of the company’s brands
• General corporate purposes

Industry overview

India has the world’s largest population in the age bracket of 5-24 years of about 500 million people, which provides a great growth opportunity for the education sector. The education sector in India was estimated to be worth $117 billion in FY20 and is expected to reach $225 billion by FY25. Meanwhile, online channels of education acts as an extension to the primary and secondary education, hobbies and language learning courses, with the industry players offering B2B, B2C and C2C solutions that are in line with customer requirements. Online education is convenient as it enables flexible learning, which is not based on time and place, and students only require a laptop or a smartphone with an internet connection. This flexibility allows working professionals to pursue new courses, which can be completed at their own pace. Also, this mode of education is more cost-effective than a regular on campus degree; this helps students who cannot afford a regular college degree to pursue/complete their degrees.

In India, edtech has been the most funded sector in 2020 with venture capital (VC) investments in edtech start-ups having tripled from January to July 2020 to $998 million, from $310 million. According to experts, many edtech companies are seeing a 3-5% rise in free audiences and 50-100% growth in monthly revenues due to the ongoing COVID-19 pandemic. This development signifies the fast emergence of the edtech segment as a favourite sector among global and domestic venture capital and private equity firms. According to Venture Intelligence data, between January and June 2020, investors infused $998 million in 31 deals, over 42 deals worth $404 million reported in 2019.

At present, due to the global pandemic, schools and universities across countries have switched to digital or online models to allow students to continue their learning. This has potentially disrupted the well-established models in school (K-12) education and university formats permanently. The popularity of tech-enabled learning solutions in the Indian education system is only going to accelerate further as educational institutions, teachers, parents and governments become increasingly willing to adopt technology. The sector is likely to witness heightened activity in innovation, new ventures, investments and mergers & acquisitions (M&A) in the future.

Pros and strengths

Focused 360-degree approach: Over the last 10+ years, the company’s student mobility services and healthcare academy services have focused mainly on health care segment. Over a period of time, the company has developed an effective method and system of counseling for students aspiring to pursue medical studies abroad.

Unique Brand Positioning: The company’s brand “MOKSH” and “MOKSH Academy” is synonymous as a career solution provider that offers an end-to-end solution for students aspiring to become a medical professional. The company has been able to deepen its brand recognition and improve its brand recall through a variety of means such as its unique service offering covering student mobility coupled with medical licensing exam test prep solutions, its strong student performance (with a track record of over 90% of the student getting successful placement in overseas universities), pan-India network, quality faculty, comprehensive study material, integrated systems and processes, and targeted marketing.

Strong network: As on June 30, 2022 and March 31, 2022, the company has 24 and 23 touch points in India respectively through its own Centers and through franchise networks with third parties to work under the brand name of MOKSH. The company has entered into 18 franchise agreements with different players from different parts of India providing student mobility services. The term of its franchise agreements is for one year and renewed annually, subject to mutual consent. The franchise model is value accretive to it and the franchisee as it increases its visibility and reach at minimal investment and the franchisee benefits from its strong brand, faculty recruitment, and technology support. The entire Franchisee network works on its technology to apply to the universities.

Risks and concerns

Business is cyclical in nature: The company’s business and revenues fluctuate based on the academic cycle of its courses and timelines of the entrance & competitive exams and timelines of admission in foreign universities, which are cyclical and instantaneous in nature and dependent on the dates of the examinations, release of the examination results by respective authorities empowered to conduct such exam and admission structure in these universities. Depending on the period when these exams are held and the admission timelines for universities, the company may recognize lower revenues in certain months or quarters of the year. In terms of its expenses, many of them are fixed in nature and it incurs them throughout the year, though some expenses may increase during beginning of new batches, such as increments for counsellors and advertising and publicity expenses to recruit students for courses. Since its revenues and expenses fluctuate quarter-to-quarter, it may result in fluctuation of profitability of the company in some quarters.

Significant revenue comes from student mobility business: The company’s mobility business constituted 32.89%, 49.18%, 61.93% and 86.41% of its consolidated revenues during the period ended June 30, 2022 and Financial year ended as on March 31, 2022, March 31, 2021 and March 31, 2020, respectively. Notwithstanding, increasing diversification of its operations, the company currently, and expect to continue for the short and medium term to, depend significantly on its revenues from its mobility business. Therefore, it may experience reduction in cash flows and liquidity if its business in this segment is significantly reduced for any reason.

Dependent on few Franchises for substantial part of student count: As on March 31, 2022, its top 5 Franchises out of 16 Franchises contributes to 51.75% of the student count. Should there be any disruptions in the operations of these Franchises, or if it is unable to extend the Franchise Agreements after the expiry of the term of the respective Franchise Agreements, it may cause a material adverse effect on its business and prospects.

Outlook

Moxsh Overseas Educon is an Edu-Medi Tech company engaged in the business of offering learning solutions, counselling and mobility services to medical studies (MBBS) students in India or abroad under its brand MOKSH (student mobility services). The company’s business model leverages upscaling technologies and uses up-to-date technology to deliver digital courses and learning solutions, which enables students to engage in self-paced learning. On the concern side, the company’s maximum centres were being operated through franchisee arrangements, leading to limited control by it on the operations and the risk of discontinuation of the Franchisees. Moreover, the company is dependent on few Franchises for a substantial part of its student count.

The company is coming out with an IPO of 6,80,800 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 153 per equity share to mobilize Rs 10.42 crore. On performance front, the company’s total revenue increased by 160.90% to Rs 1009.90 lakh for the financial year ended March 31, 2022 from Rs 386.78 lakh for the financial year ended March 31, 2021. This increase was primarily due to an increase in revenue from operations and other income. Moreover, the company’s profit after tax increased by 2229.16% to Rs 111.14 lakh for the financial year ended March 31, 2022 from Rs 4.77 lakh for the financial year ended March 31, 2021. Going forward, the company is planning to leverage its brand recognition, its experience and its scalable business model, to service the increasing demand for its test preparatory and mobility services. Also, the company plans to enter the B-2-B-2-C space by entering into arrangement where it will recruit students for foreign medical universities and these foreign medical universities will provide access to the company to their students aspiring to appear for USMLE. This would enable a two way process of recruitment of students and mentorship for USMLE to the students studying in these universities under the student mobility services and healthcare academy services offered by the company.