CL Educate

CL Educate reported a significant financial uplift in H1 FY26, with total revenue growing 64.43% year-on-year to ₹319 crores from ₹194 crores in H1 FY25. This growth was primarily driven by DEXIT Global, which contributed ₹139 crores to the revenue. EBITDA also saw a substantial increase of 100% YoY, reaching ₹50 crores from ₹25 crores in the prior year. However, consolidated PAT declined sharply by 80% to ₹1.5 crores from ₹7.5 crores, mainly due to a higher finance cost of ₹26 crores and increased depreciation of ₹19 crores, both linked to the DEXIT acquisition.

The acquisition of NSEIT Limited, now rechristened DEXIT Global, has been a strategic success, fully integrated within CL Educate. In H1 FY26, DEXIT contributed ₹139 crores to revenue, growing 12% from an adjusted ₹115-117 crores in H1 FY25. Its EBITDA also surged over 40% to ₹38 crores from ₹27 crores, attributed to higher volumes, an improved operating mix, and better capacity utilization across its 237 centers. The transition from an NSE company to a CL Educate group company has been smooth, with all client contracts successfully rolled over and new client acquisition progressing well.

The EdTech business, particularly test prep, is experiencing a period of flux with students shifting between offline and online modes, leading to pricing pressures. While market share has been retained, ARPUs are compromised. The company is focusing on launching new programs in segments like BBA-IPM, which shows promise, and low-price segments like test series and self-study programs. CUET remains a 'work in progress' due to past glitches, but an increasing difficulty level offers a potential for future growth. Platform monetization and institutional partnerships are also expanding, with AI being incorporated into academic support.

The MarTech business demonstrated stable growth, with revenues increasing by 6% year-on-year. International market operations were a strong driver, growing from ₹21 crores to ₹28 crores. However, India business saw a slight decline from ₹57 crores to ₹54 crores. New activities like CXO engagement and audience generation programs are gaining traction. The 'Utsav' business, incorporated last financial year, is currently in an investment phase, causing a marginal 3% drag on overall MarTech EBITDA, which is expected to continue for the next four to six quarters before becoming accretive.

The company's finance costs significantly increased to ₹26 crores in H1 FY26, primarily due to the ₹200 crores debt taken for the NSEIT acquisition last year. Additionally, an accounting entry of approximately ₹5 crores per quarter, related to the fair valuation of Redeemable Preference Shares as part of INDAS, contributes to these costs. Management expects this accounting-related finance cost to dissipate after the capital reduction scheme, which involves ₹183 crores of cash belonging to NSE held in escrow, is concluded in Q3 or Q4 FY26.

CL Educate is operating as a 'three-engine platform' with EdTech, MarTech, and DEXIT showing growth momentum and margin discipline. The company is focused on debt reduction from a medium to long-term perspective. Discussions are underway for potential strategic investments or fundraising, likely an equity raise, with more details to be shared next quarter. Management indicated that DEXIT margins are expected to remain stable, and no significant investments are planned for DEXIT in the next 4-8 quarters that are not linked to commensurate growth.