Thursday, April 12, 2012

MT Educare Bought by Celebrity Investor Shivanand Mankekar on IPO Listing Day

By Special Correspondent:

MT Educare Ltd (BSE: 534312, NSE: MTEDUCARE) which listed on Thursday, 12th April 2012, after a successful IPO recently, saw significant buys by one of India’s best known individual investors, Prof. Shivanand Shankar Mankekar and his family.

The well-known academician-investor picked up 2.94 lakh shares in NSE at Rs. 89.91 a share and 3.85 lakh shares in BSE at Rs. 89.03 a share. Additionally, family member Laxmi Shivanand Mankekar bought 2.10 lakh shares in Bombay Stock Exchange.

Altogether, the buys by Prof. Mankekar and family in both the exchanges amounted to 8.89 lakh shares or 2.25% of MT Educare.

The total buy was worth Rs. 7.97 crore, and there were no identifiable or large sellers as counterparties to the buys by the Mankekars. 

The listing day was also noticeable for the absence of any other large buyers.

Large day traders were also absent, unlike the usual practice by them, due to new rules preventing day trades for the first 10 days after listing. To enforce this rule, MT Educare was included in the Trade-to-Trade segment by both the exchanges.

Prof. Shivanand Mankekar is a professor of management at Jamnalal Bajaj Institute of Management Studies (JBIMS), one of the oldest business schools in India, and from where he took his MBA in 1975. 

JBIMS is the Department of Management Studies of University of Mumbai, and was established by the University in 1965 in collaboration with Stanford University’s Graduate School of Business.

Prof. Mankekar is widely regarded as an investment guru, despite his media-shy nature, and is noted for his stress on value investments and cash-flows while analysing any company. More than a few highly successful investment professionals in India consider Prof. Mankekar as their guru, one of the most noted among them being Uday Kotak, Co-founder and MD of Kotak Mahindra Bank.

MT Educare runs the popular education brand Mahesh Tutorials, which trains high-school and pre-university students for their regular board exams, as well as for entrance exams for professional courses in science and commerce streams like BTech and CA.

Though Mahesh Tutorials is noted for its strong growth track-record and further growth potential, as well as its corporate setup unlike its fragmented competitors, the IPO was done at high valuations, that caused many analysts to caution that it would require 2 to 3 years of sustained growth for the stock to give meaningful returns.

Nevertheless, the IPO was a good success with oversubscriptions coming up to 5 times. 

MT Educare had fixed the IPO issue price at Rs. 80 at the upper end of the price band, and on Thursday, during the pre-opening session, the equilibrium price as per the new norms was fixed at Rs. 86.05. But soon after opening at this rate, the scrip got locked in its Upper Circuit Limit of Rs. 90.35 in both BSE & NSE, which is a significant appreciation of 12.94% from the IPO price.

The IPO was not a regular primary issue alone, with two-thirds of the offering being an offer for sale by an early PE investor, Helix Investments. Out of the Rs. 99 crore IPO figure, Rs. 64 crore was sale by Helix and the rest Rs. 35 crore was the new issue by MT Educare. Helix is estimated to have made 2.5 times returns in MT Educare in less than 5 years. They have also retained 5.25% stake in the company.

Other institutional investors in the company are Nomura Trust & Banking, Axis Bank, IDBI Trusteeship Services, Merrill Lynch Capital Markets, and Deutsche Securities Mauritius.

MT Educare is largely focused in Mumbai with three-fourths of its 188 coaching centres there. But it is also present in 110 locations across Maharashtra, Karnataka, Tamilnadu, & Gujarat.

MT Educare coached 58,300 students in FY’11 with an average per student revenue at Rs. 18,400.

Promoter’s stake is 42.88%, held entirely by Founder Mahesh Raghu Shetty. 

The company’s main plans with the IPO money of Rs. 35 crore is to start their own Pre-University College Campus in Mangalore, Karnataka, and to start coaching centres at 20 locations more. 

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