Veranda Learning Solutions Limited — Q2 FY26 earnings call

Call held 30 Oct 2025

Management summary

Veranda Learning Solutions reported a strong Q2 FY26 with revenue up 20% YoY to ₹127 crores and adjusted PAT surging 185% YoY to ₹23.3 crores. The quarter was marked by significant strategic realignments, including the demerger of the commerce vertical into a debt-free entity and the divestment of the vocational segment, positioning the company for sustained profitability and global expansion. Management provided optimistic FY26 guidance for the combined entity, projecting ₹650 crores in revenue and ₹170 crores in EBITDA, while also detailing future growth plans for the demerged businesses.

Highlights

  • Q2 FY26 Revenue of ₹127 crores, up 20% YoY, and H1 FY26 Revenue up 20% YoY.

  • Q2 FY26 Adjusted PAT of ₹23.3 crores, up 185% YoY, and H1 FY26 Adjusted PAT up 148% YoY.

  • Gross profit margin improved to 61% in Q2 FY26, a 60 basis points improvement.

  • Collections were robust at ₹173 crores in Q2, up from ₹137 crores in the previous quarter.

  • Enrollments reached 1 lakh students, a significant increase from 61,000 last quarter.

  • Corporate costs reduced from ₹24 crores last financial year to ₹15 crores currently.

Concerns

  • Academic segment revenue degrowth in Q2, attributed to admission cycle seasonality.

  • High cost of existing debt (14% average interest) from Ascertis, though refinancing is underway.

  • Receivable cycle from schools for K-12 segment is a concern for potential asset-light expansion.

Key financials

  1. Revenue ₹127 Cr +20%YoY
  2. Gross Profit ₹78 Cr
  3. Gross Profit Margin 61%
  4. EBITDA ₹48 Cr
  5. Reported PAT ₹97 Cr
  6. Adjusted PAT ₹23.3 Cr +185%YoY
  7. Collections ₹173 Cr +26.3%QoQ
  8. Debt Outstanding ₹224 Cr

What they filed

Q1 FY27: revenue up 41.5%, net profit up 466.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue106 99 87 106 127 +20%117 +18%132 +52%150 +42%
EBITDA28 -33 18 32 46 +64%38 +215%47 +161%52 +63%
Net profit-32 -203 8 6 96 +400%13 +106%16 +100%34 +467%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Capex Capex disclosed
    • Lease deposits and working capital for asset-light expansion of junior colleges, commerce colleges, and offline centers.
    Yes. So, all of this expansion would be done in a very asset-light form because all premises, whether it is for junior colleges or for commerce colleges, or including offline centers that we establish, all of which will be leased premises. So, our investment will only be to the extent of a lease deposit and working capital that we might need in the first year of operations. So, all expansions will be asset-light as far as the commerce segment is concerned, be it expanding junior colleges, commerce colleges or our offline centers.
  • Debt Gross ₹224 Cr Cost 14%
    • Repayment Repayment of non-current borrowings, making the commerce vertical debt-free. ₹310 Cr
    • Refinance Refinancing high-cost debt from Ascertis with low-cost debt from public sector banks.
    And our balance sheet remains strong with Rs. 224 crores of debt outstanding at an average interest cost of 14%.
  • M&A J.K. Shah Commerce Education Limited Divestment · Announced

    To unlock long-term value for shareholders and enable independent scaling of both businesses, creating a debt-free entity.

    Existing shareholders will receive 1 share of JKSC for every Veranda share, ensuring full value continuity. The entity will operate as a debt-free entity with an expected FY26 revenue of nearly ₹350 crores and EBITDA of about ₹140 crores.

    our Board approved the demerger of the Commerce Test Prep vertical into a new entity, J.K. Shah Commerce Education Limited to unlock long-term value for shareholders and enable independent scaling of both businesses. ... The overall entity will operate as a debt-free entity with full operational autonomy and an expected FY '26 revenue of nearly Rs. 350 crores and an EBITDA of about Rs. 140 crores. Existing shareholders will receive 1 share of JKSC for every Veranda share they hold, ensuring full value continuity.
  • M&A SNVA EduTech Limited (vocational and skilling segment) Divestment · Announced

    Sharpening business focus while retaining exposure to global education markets through this partnership, creating one of the most comprehensive global education ecosystems.

    SNVA EduTech will issue shares to Veranda and its subsidiaries, giving a joint 50% stake in the new entity. The new entity is projected to generate over ₹250 crores in revenue by FY26, growing at a CAGR of 25%, with EBITDA exceeding ₹60 crores.

    Equally transformative is the disinvestment of our vocational and skilling segment comprising Brain4ce Education Solutions Limited under the brand of Edureka, Veranda HigherEd and Six Phrase to SNVA EduTech Limited, a global education and skilling enterprise. This transaction is structured as a share-based arrangement. SNVA EduTech will issue shares to Veranda and its subsidiaries, giving us a joint 50% stake in the new entity. ... The new entity is projected to generate over Rs. 250 crores in revenue by FY '26, growing at a CAGR of 25%, with EBITDA exceeding Rs. 60 crores.

Guidance & targets

Revenue

  • Combined Entity Revenue Revenue · FY26 · High confidence ₹650 crores
    Cash flows and collections continue to be robust, and we are confident of achieving the revenue guidance of Rs. 650 crores and EBITDA of Rs. 170 crores with a PAT of Rs. 70 crores by FY '26.

    — Mohasin Khan

  • JKSC (Commerce) Revenue Revenue · FY26 · High confidence ₹350 crores
    The overall entity will operate as a debt-free entity with full operational autonomy and an expected FY '26 revenue of nearly Rs. 350 crores and an EBITDA of about Rs. 140 crores.

    — Suresh Kalpathi

  • SNVA EduTech (Vocational) Revenue Revenue · FY26 · High confidence ₹250 crores
    The new entity is projected to generate over Rs. 250 crores in revenue by FY '26, growing at a CAGR of 25%, with EBITDA exceeding Rs. 60 crores.

    — Suresh Kalpathi

Profitability

  • Combined Entity EBITDA Profitability · FY26 · High confidence ₹170 crores
    Cash flows and collections continue to be robust, and we are confident of achieving the revenue guidance of Rs. 650 crores and EBITDA of Rs. 170 crores with a PAT of Rs. 70 crores by FY '26.

    — Mohasin Khan

  • Combined Entity PAT Profitability · FY26 · High confidence ₹70 crores

    — Mohasin Khan

  • JKSC (Commerce) EBITDA Profitability · FY26 · High confidence ₹140 crores
    The overall entity will operate as a debt-free entity with full operational autonomy and an expected FY '26 revenue of nearly Rs. 350 crores and an EBITDA of about Rs. 140 crores.

    — Suresh Kalpathi

  • SNVA EduTech (Vocational) EBITDA Profitability · FY26 · High confidence ₹60 crores
    The new entity is projected to generate over Rs. 250 crores in revenue by FY '26, growing at a CAGR of 25%, with EBITDA exceeding Rs. 60 crores.

    — Suresh Kalpathi

  • Commerce Vertical EBITDA (post-demerger) Profitability · FY27 · Medium confidence ₹200 crores
    Now, for the commerce part of the business, it is expected to get towards Rs. 200 crores of EBITDA.

    — Suresh Kalpathi

  • Non-Commerce Vertical EBITDA (post-demerger) Profitability · FY27 · Medium confidence ₹50-60 crores
    From the non-commerce part of the business, that's expected to achieve about Rs. 50 crores to Rs. 60 crores of EBITDA for FY '27.

    — Suresh Kalpathi

Margin

  • Commerce Vertical EBITDA Margin Margin · next 4-5 years · Medium confidence 46-47%

    From 35% today

    So, traditionally, we are trading at a margin of 35%. So, over the next, if I say to you, next four to five years, we plan to reach at 47%.

    — Mohasin Khan

ROE

  • ROE ROE · next three years · Medium confidence 24-25%

    From 12% today

    I will take it out. So, currently, we are trading at 12% ROE, okay? The target is next three years to make it happen to 24%, 25%.

    — Mohasin Khan

  • ROE ROE · by five years · Medium confidence 30%

    From 12% today

    The target is by five years to take it to 30%, by three years to take it to 25%.

    — Mohasin Khan

What to watch in Q3 FY26

Demerger completion and JKSC listing

Q3 FY26 (no objection), Q4 FY26 (NCLT approval), Q1 FY27 (listing)
Current Filed with exchanges, awaiting NCLT approval
Target No objection from stock exchange by December, NCLT approval within 3 months, listing by June/July first week

Why it matters

Completion of the demerger is key to unlocking shareholder value and establishing a debt-free commerce entity.

Typically, it's about three months for getting a no objection from the stock exchange. So, we expect to be able to get that by last week of December, which is about three months from the time we file. From that, another three months is what the time it takes with the NCLT to get it approved through the NCLT process. And after that really it's a listing and trading, which could be a couple of months. That's the sort of time line we have indicated where we should expect to see it listed traded around June last week, July first week.

Risks & concerns

  • Demerger timeline extension

    medium

    Analyst inquired about execution risks that could stretch the 12-month timeline for JKSC listing. Management expressed confidence in the current timeline, citing smooth process and timely responses to queries.

    Thank you for giving me the opportunity. Sir, my first question is around the demerger time line that you have showed. So, you have indicated a 12-month time line for JKSC listing, so what are the two, three execution risks do you think which could stretch this time line beyond guidance?

    Analyst downplayed

  • Receivable cycle from K-12 schools

    medium

    Management noted that the cycle time to collect money from schools (for content and curriculum support) has been a cause for concern, impacting the ability to collect from schools.

    The only reason we have not gone too deep into that model is to understand what is this receivable cycle from schools. I think that's the only thing that's sort of holding us back because from what we have seen in the past, typically, if it's a Rs. 15 lakh, Rs. 20 lakh type of billing that you do on a per school basis to provide content and curriculum and faculty support, the cycle time it takes for us to receive the money has been some cause of concern, ability to collect from schools.

    Management acknowledged

Q&A highlights

7 direct
Demerger timeline and execution risks Direct
Typically, it's about three months for getting a no objection from the stock exchange. So, we expect to be able to get that by last week of December, which is about three months from the time we file. From that, another three months is what the time it takes with the NCLT to get it approved through the NCLT process. And after that really it's a listing and trading, which could be a couple of months. That's the sort of time line we have indicated where we should expect to see it listed traded around June last week, July first week.

Analyst inquired about potential delays in the demerger process, which is critical for unlocking shareholder value. Management provided a clear timeline and expressed confidence in the process.

Asked by Rehan Saiyyed

Capital allocation strategy post-demerger Direct
So, just to summarize, from the QIP base, the debt that is there in the commerce vehicle has been extinguished, so it's expected to list as a debt-free company. The balance debt that would be there post the demerger in the residual business would be roughly about Rs. 150 crores to Rs. 160 crores of the overall debt that was given by Ascertis, and there is some debt from the promoters.

Question on how the company plans to allocate capital after the demerger and debt reduction, indicating a focus on asset-light organic expansion and deleveraging the residual business.

Asked by Rehan Saiyyed

Academic segment degrowth and EBITDA margin impact Partial
As far as our academic business is concerned, it largely comes from about 5,400 students that we have. And these are students who study across five CBSE schools and two Cambridge International Schools. That's currently what's the size of the business. There is a plan to add more schools going forward into the future.

Analyst questioned the degrowth in the academic segment and its impact on EBITDA margins. Management explained it as seasonal due to admission cycles and outlined plans for future growth through student intake and fee increases.

Asked by Isha Agarwal

Cash flow dynamics and one-time events Direct
Okay. So, there were one-time events like we acquired J.K. Shah Education of Rs. 100 crores payout during the current half year. We purchased 24% stake from the Mr. J.K. Shah, and we purchased the balance stakes from Veranda K12. So, there were financial liabilities being paid out in the current half year, which are non-recurring from next quarter.

Analyst sought clarification on negative cash flows in H1. Management attributed it to one-time payouts for acquisitions, assuring that cash flows would normalize from next quarter.

Asked by Isha Agarwal

CAPEX plans for non-commerce segment Direct
So, what we are planning from a growth perspective in the commerce segment, there are a couple of initiatives which we are already working on, and they are well on the way. First, as you rightly said is the expansion of colleges. And when I say colleges, it is both junior colleges and degree colleges.

Question on future CAPEX for the non-commerce side, specifically for college and center additions. Management confirmed an asset-light expansion strategy focusing on leased premises and working capital.

Asked by Isha Agarwal

Deferred revenue and enrollment-revenue correlation Direct
But when we sell the USB sticks, which is basically recorded programs, the revenue recognition is significantly accelerated because we have already sold the product. The student can see it 1.5x over the next three months or six months, but our revenue recognition is accelerated to the point of sale. So, that reduces the deferred revenue that we capture where the collection becomes almost the same as sales.

Analyst questioned why deferred revenue decreased despite higher enrollments. Management explained the impact of a shift towards recorded programs (USB sticks) which have accelerated revenue recognition compared to live programs.

Asked by Darshil Jhaveri

Rationalization of corporate overheads post-demerger Direct
So, most of the corporate cost sitting now is like a management level, which will be absorbed by the respective segments on a revenue sharing or a cost plus markup basis, which has to be studied with the help of outside consultants, which will be planned in the future. But limited point that there has been a rationalization in the corporate cost, which you can see in the press release which I shared, we are on that.

Analyst asked about how corporate overheads would be managed between the demerged entities. Management detailed the reduction in corporate costs and the plan for segment-specific absorption post-demerger.

Asked by Deepesh Sancheti

Government test preparation segment performance Direct
Academic or you are saying governmental? Sorry, government has increased quarter-on-quarter from 33% to 35%, stagnated. Academic is the one which has been reduced. Academic because I think, as Suresh explained, because of the admission season, it's a skewed business. Otherwise, our academic government test prep has been increased from last Q1 23% to Q2 to 33%, 43% uptick, because of the notifications in Q1 the deferred revenue has been come to Q2.

Analyst questioned the reported decline in government test prep revenue. Management clarified that government test prep actually increased QoQ, while academic was impacted by seasonality, and explained the deferred revenue impact.

Asked by Aditya Rawal

3 min read 6 chapters

Detailed narrative

Strong Q2 FY26 Performance and H1 Momentum

Veranda Learning Solutions reported a robust Q2 FY26, with revenue reaching ₹127 crores, marking a 20% year-on-year growth. The company achieved a gross profit of ₹78 crores, translating to a 61% margin, an improvement of 60 basis points. Adjusted PAT for the quarter stood at ₹23.3 crores, demonstrating a significant 185% year-on-year increase. For the first half of FY26, revenue also grew by 20% and adjusted PAT by 148% year-on-year, underscoring strong operational excellence.

Strategic Realignment: Commerce Demerger

The company's Board approved the demerger of its Commerce Test Prep vertical into a new entity, J.K. Shah Commerce Education Limited. This new entity is projected to be debt-free and is expected to generate approximately ₹350 crores in revenue and ₹140 crores in EBITDA for FY26. Existing Veranda shareholders will receive one share of JKSC for every Veranda share, ensuring continuity of value. The demerger scheme was filed in late September, with regulatory approvals expected to lead to listing by June/July first week of the next financial year.

Strategic Realignment: Vocational Segment Divestment

Veranda divested its vocational and skilling segment, including brands like Edureka and Six Phrase, to SNVA EduTech Limited. This transaction is structured as a share-based arrangement, granting Veranda a 50% stake in the new SNVA EduTech entity. This new entity is projected to achieve over ₹250 crores in revenue by FY26, growing at a CAGR of 25%, with EBITDA exceeding ₹60 crores. This partnership aims to create a comprehensive global education ecosystem and sharpen Veranda's business focus.

Asset-Light Expansion and Debt Management

All future expansion initiatives, particularly in the academic and government test prep segments, will be asset-light, primarily involving leased premises and working capital investments. The company's total debt outstanding is ₹224 crores with an average interest cost of 14%. Post-demerger, the commerce vertical will be debt-free, while the residual business will carry approximately ₹150-160 crores of debt. Management is in advanced discussions with public sector banks to refinance the high-cost Ascertis debt, expecting a significant reduction in interest costs by Q4 FY26.

Enrollment Growth and Deferred Revenue Dynamics

Enrollments saw a significant jump, reaching 1 lakh students this quarter compared to 61,000 in the previous quarter. Despite this, deferred revenue decreased from ₹101 crores to ₹94 crores. Management clarified that this is due to a shift in product mix towards recorded programs (USB sticks), where revenue recognition is accelerated upon sale, unlike live programs where revenue is recognized over the course duration. This shift contributes to higher current revenue and EBITDA.

FY26 and FY27 Financial Outlook

For the combined entity in FY26, Veranda Learning maintains its guidance of ₹650 crores in revenue, ₹170 crores in EBITDA, and ₹70 crores in PAT. Looking ahead to FY27 for the demerged entities, the commerce business is expected to achieve around ₹200 crores in EBITDA, while the non-commerce part (academic and government test prep) is projected to contribute ₹50-60 crores in EBITDA. The company aims to improve the commerce vertical's EBITDA margin from 35% to 46-47% over the next 4-5 years and target an ROE of 24-25% in three years, reaching 30% in five years.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Consumer Services earnings calls