Eruditus has emerged as the second-largest edtech in India, with Rs 3,322 crore in revenue ($400 million) for fiscal year 2023. It joins a growing list of Indian internet firms — Pine Labs, Udaan, Razorpay and Groww, among others — that are in the process of ‘reverse flipping,’ as local markets begin to offer rich valuations for new economy scrips.
Eruditus is engaging with two of the Big Four firms, the people cited said. This is in preparation for a move back to the country, they said.
Ashwin Damera, cofounder and chief executive of Eruditus, declined to comment on his company’s shift.
On the previous fiscal’s showing, he said revenue growth was driven by “better operating metrics like lower costs on customer acquisition and marketing, as well as data-driven synergies,” which reduced operating losses.
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The startup’s revenue jumped by 75% in FY23, making it the second-largest online education firm by revenue, after Byju’s.
Byju Raveendran’s company is yet to report its audited FY23 financials. People in the know estimate its FY22 revenue at around Rs 5,000 crore, with a loss of over Rs 8,200 crore.
Eruditus reported improved adjusted Ebitda at negative Rs 422 crore ($50 million) and is on track to hit operating profits for the full accounting year. It follows the July-June period for its financial reporting.
The higher education focused firm is valued at $3.2 billion.
Return to Homeland
On the matter of direct listing in India, 15-20 startups with foreign domiciles have been working with a top law firm to engage with the finance ministry. The group made a representation to finance minister Nirmala Sitharaman in November.
“This is a more complex matter as Company Act laws need to be changed for this to be in effect. The group met the finance minister in November, seeking easier norms for companies to list here,” a person aware of the matter said.
The issue was also discussed by top unicorn founders last week, during a meeting with cabinet minister Piyush Goyal in New Delhi, said people present at the occasion.
Industry watchers believe positive sentiment is an important factor. “Look at the Ebitda multiples being offered by private equity players on 12-18 month forward-looking numbers. The Indian public markets are offering better than that,” said one person.
“A lot of factors are driving companies to move base here and tap public markets. India is the best place to be now — there is enough depth and appetite,” said a top entrepreneur who is moving his firm’s domicile to India.
For Mumbai-based Eruditus, “reverse merger is the best option at the moment. They (Eruditus) are taking advice from two Big Four firms, along with law firms who are working on the proposal,” said those aware of the company’s thinking.
“The other option (would be) to take the Indian subsidiary public, but that will require moving all value of the business to the Indian unit,” they added, while pointing out that tax implications would have to be considered.
Scoring high
Though the Byju’s-led edtech sector is in rough waters at present, Eruditus has rendered an upbeat performance for FY23.
“Marketing cost was at 56% of revenue in FY22, and it’s at 29% (in FY23). Employee expenses, excluding non-cash share appreciation expense, also reduced to 27% in FY23, from 46%,” said Damera. Eruditus’ net loss, including non-cash items, was at Rs 1,049 crore.
Among others in edtech, Upgrad reported Rs 1,194 crore revenue in FY23, while for Unacademy, it was Rs 907 crore. Others such as Byju’s-owned Great Learning clocked a revenue of Rs 801 crore, while Physicswallah and Simplilearn came in at Rs 798 crore and Rs 701 crore, respectively.
The troubled Byju’s is yet to file FY22 earnings with the Registrar of Companies but has presented its investor with the financials.