Veranda Learning Solutions Limited has announced plans to demerge its commerce education vertical into a separate listed entity, J.K. Shah Commerce Education Limited (JKSC). This strategic move aims to unlock value and drive focused growth in both the commerce and non-commerce segments of the company.

Demerger Details

The demerger will follow a mirror shareholding structure, with existing Veranda shareholders receiving one share of JKSC for every share held in Veranda. The process is expected to take 7-8 months, pending regulatory approvals.

Financial Outlook

For FY2026, the company projects:

The commerce vertical anticipates 22% revenue growth for FY2026, with student numbers expected to increase from 1.7 lakh to 2 lakh.

Growth Drivers

Suresh Kalpathi, Chairman and Executive Director, highlighted two key drivers for the commerce education sector:

1. Domestic demand due to India's strengthening economy
2. Global Capability Centers (GCCs) setting up offshore financial services in India

The industry is projected to grow at 35-40% annually for the next 5-7 years, with JKSC aiming to match or exceed this growth rate.

Expansion Plans

JKSC currently operates across 200 physical locations in India. The company plans to expand its presence, particularly in Tier 2 and Tier 3 towns, by establishing J.K. Shah College of Commerce as a premium brand.

Debt Structure

Post-demerger, JKSC will be debt-free, while Veranda will retain INR 125.00 crores of debt at a 17.25% interest rate. The company plans to refinance this debt to a lower cost in the coming months.

Market Position

Veranda Learning Solutions, through its various brands including J.K. Shah Classes, BB Virtuals, Tapasya, Logic, and Navkar, claims market leadership in the commerce education sector. The company produced around 150 rank holders in recent exams, emphasizing its focus on quality education.

Future Outlook

Management expects the commerce business to grow at 35-40% annually over the next 5-7 years. The company is also exploring growth opportunities in its non-commerce verticals, including vocational training, K-12 education, and government test preparation.

Suresh Kalpathi stated, "We are at an exciting inflection point. This demerger is poised to drive enhanced operational and financial clarity, leading to an independent, market-driven valuation for our commerce vertical."

As Veranda Learning Solutions embarks on this strategic transition, the company aims to cement its position as a leader in the education sector while creating value for its shareholders.

Veranda Learning Solutions Limited (VLS) has announced plans to demerge its Commerce Test Prep segment into a separate listed entity, JK Shah Commerce Education Limited (JKSC). This strategic move aims to create a focused commerce education entity and unlock value for shareholders.

Demerger Details

The demerger will be executed through a composite scheme that requires approval from the National Company Law Tribunal (NCLT). Under the proposed plan:

• Existing VLS shareholders will receive shares in JKSC at a 1:1 ratio, meaning one JKSC share for every VLS share held.
• The transaction includes transferring properties, assets, investments, employees, and contracts related to the Commerce Test Prep business to JKSC.
• The commerce segment currently operates across multiple entities, including JK Shah, BB Virtual, Navkar, Tapasya, and managed colleges.

Business Overview

The Commerce Test Prep segment of VLS serves over 200,000 students and has projected revenues of ₹344.00 crores for FY26E. This represents a significant growth from the projected ₹281.00 crores for FY25, indicating a 22% year-over-year increase.

Financial Projections

The company has provided financial projections for the Commerce Segment:

Rationale for Demerger

The demerger is driven by several strategic considerations:

1. Creating a focused commerce education entity with a debt-free structure.
2. Enabling independent market valuation for the commerce education business.
3. Allowing dedicated resource allocation for growth in the financial services education market.
4. Providing shareholders with direct exposure to a high-growth education platform.

Timeline and Process

The company expects the indicative timeline for JKSC listing to be approximately 12 months. The process involves several steps, including:

• Obtaining approvals from stock exchanges and NCLT
• Conducting shareholders and creditors meetings
• Filing the scheme with the Registrar of Companies
• Issuing and listing shares of the new company

Market Outlook

The financial services education market is expected to witness strong demand growth of 25-35%, driven by GCC players entering the domestic market. JKSC, as a market leader with a national footprint across offline and online channels, is well-positioned to capitalize on this growth.

Valuation Expectations

Given its leadership position and strong growth trajectory, JKSC is expected to outpace industry growth, achieving 35-40% growth. At the time of listing, assuming a PEG ratio of 1, JKSC is likely to be valued at 35x-40x earnings.

This demerger represents a significant step for Veranda Learning Solutions Limited as it seeks to unlock value and create focused entities in the education sector. Shareholders and potential investors will be watching closely as the process unfolds over the coming months.