Zee Learn

Zee Learn, which was hived off from Zee Entertainment Enterprises very recently made its debut on the bourses. .It had given one share for every four shares held by the shareholders of Zee Entertainment. The company had demerged its education business from ETC Networks into Zee Interactive Learning Systems (Zee Learn) from April 1, 2010.

Zee Learn made al debut on the bourses with a listing of 12.2 crore shares. Zee Learn listed Rs.101.10 at discount of 65.94 per cent to its Issue Price of Rs.296.55 .

Zee Learn runs India's largest chain of pre-schools under brand Kidzee with more than 700 pre-schools in more than 300 cities after entering the segment in 2003. During the current fiscal Kidzee has seen enrollment of more than 36,000 students.

The company also acts as a consultant to local entrepreneurs who wish to setup K-12 schools, under its brand name Mount Litera Zee Schools. Launched in December 2008, 50 schools were signed up under Mount Litera Zee Schools in the first year and it has further expanded to 75 schools.

Zee Learn also plans to launch a chain of premium preschools called Mount Litera World Preschools. These pre-schools would be company owned or joint ventures with progressive individuals or entities.

The firm also operates vocational education under Zee Institute of Media Arts (ZIMA) and Zee Institute of Creative Art (ZICA). While ZIMA is a TV and film training institute in Mumbai, ZICA is classical and digital animation training academy.

The Promotors Holding is 42.61 per cent, DII’s is 16.69 and FII’s holding is 29.96.

Total Revenues and PAT for the period 4 January 2010 to 30 September 2010 was Rs. 20.35 crores and Rs. 1.59 crores respectively. The company has a Share Capital of Rs.12.27 crores, face value being Re.1. The company’s Debt Equity ratio as on 30.9.2010 was 0.82. The company is sitting on cash to the tune of Rs.15.43 which means the company can expand further without leverage and thus enhance its earnings in the quarters to come.

Zee Learn which has a market capitalization of Rs.322 crores is under T segment and has been hitting the upper circuit everyday. Today Zee Learn rested at Rs.26.25, up by Rs.1.25 or 5 per cent.

It may be noted that the transfer of scrips for trading and settlement on a trade-to-trade basis is purely on account of market surveillance measure and it should not be construed as an adverse action against the company. Further, this is a temporary measure and will be periodically reviewed by the bourses..

Conclusion : Since it is difficult to predict how the scrip will react in the short/medium term since it is under T segment, yet considering strong institutional holding to the tune of 45 per cent, I believe there is no harm in taking a short/medium term bet on Zee Learn.

Kishor S. Khot, [Kishor@hbjcapital.com], Equity Strategist, HBJ Capital Services Pvt Ltd