Veranda Learning Solutions Q1 FY27 earnings call

Veranda Learning Solutions Limited reported a strong start to FY27, with revenue from operations growing 42% year-on-year to INR 150 crores. Profit After Tax (PAT) surged 472% year-on-year to INR 34 crores, compared to INR 5.9 crores in Q1 FY26, marking the company's sixth consecutive PAT positive quarter. Overall enrollments increased by 35% year-on-year to 1.03 lakh students, and collections grew by 27% year-on-year, demonstrating healthy demand and robust execution across all business segments.

The Commerce Test Prep segment was a key driver of growth, with revenue increasing 53% year-on-year to INR 108.6 crores and EBITDA growing 58% year-on-year to INR 42.7 crores, achieving an EBITDA margin of approximately 40%. The government test preparation business also performed well, with revenue up 41% year-on-year to INR 32.5 crores and EBITDA improving to nearly INR 4 crores from a near breakeven level. The Academic segment posted a revenue of INR 12.2 crores, up 22% year-on-year, with EBITDA of INR 9.2 crores, up 53% year-on-year.

The demerger process for the Commerce vertical is progressing as planned, with the Board having approved the composite scheme in late 2025. The scheme was subsequently filed with NSE and BSE, and new addiction certificates were received in January 2026. Following shareholder approval in April, the second motion was filed with the NCLT. The next NCLT hearing is scheduled for August 17, 2026, and management expects the entire process to be completed by September 2026, leading to the separate listing of JK Shah Commerce Education Limited. This demerger is anticipated to unlock significant value for shareholders.

Veranda Learning Solutions is focused on several strategic priorities for FY27, including expanding its government test preparation business into Karnataka to tap state-level competitive exams and deepening its K-12 value chain through preschool managed operations. The company also plans to expand its offline commerce college network into 15 new locations and establish an offline presence in North and West India (UP, Bihar, Rajasthan, Gujarat) to reduce regional concentration. These initiatives are part of the 'Veranda 2.0' strategy, emphasizing scalable, asset-light delivery of high-quality, outcome-driven education.

While revenue grew significantly, Q1 FY27 EBITDA grew 10% year-on-year to INR 54 crores. Management clarified that this lower growth was partly due to a one-time^📎 other income of INR 17 crores in Q1 FY26. Additionally, the company incurred increased advertising and marketing expenses in Q1 FY27 to establish the commerce brand as a standalone entity post-demerger, and initial costs for setting up 15 new managed commerce colleges were expensed. These investments are strategic for future growth, with an overall FY27 EBITDA margin guidance of 38.8%.

The company has successfully undertaken a deleveraging initiative, refinancing its debt at a lower cost. The cost of debt has been reduced from 17.5% last year to a current range of 9% to 9.5%. The total debt on the commerce business stands at INR 125 crores, and on the non-commerce business at INR 145 crores. This improved capital structure is expected to contribute positively to profitability and long-term value creation.