Jaro Institute IPO: Online Higher-Ed & Upskilling Play – Should You Subscribe?

Company and its Business Operations

Jaro Institute of Technology Management & Research Ltd. (“Jaro Education”) was incorporated in 2009 and focuses on online higher-education degree programmes and executive/upskilling certifications delivered in collaboration with reputed Indian and global institutions. It operates an asset-light, aggregator-cum-distribution model—curating, marketing and managing learner acquisition and delivery with partner institutes including IIT Delhi, IIM Mumbai and international partners such as University of Toronto, Deakin and MIT Sloan. Geographically, partner institutions span West, North, South and East India with select global tie-ups. The company divested legacy subsidiaries in FY24 and, as of FY25, has no subsidiaries. Key milestones include rapid programme expansion with IIT Delhi from 1 to 11 courses since 2022.

Industry Outlook

India’s higher education and upskilling sector is on a strong growth trajectory, underpinned by rising enrolments, government reforms, and rapid digitization. The domestic higher education market stood at INR 56 lakh million in FY 2024 and is projected to expand to INR 90 lakh million by FY 2028, reflecting a CAGR of 12.6%. Within this, the online higher education and upskilling market is a major growth engine, expected to nearly double from INR 3.8 lakh million in FY 2024 to INR 8.5 lakh million by FY 2028, growing at a CAGR of 22.2%. Sub-segments such as online degree programmers and certification/upskilling courses are anticipated to grow at 26.4% and 24.0% CAGR, respectively. This momentum is driven by affordable internet, widespread smartphone adoption, and UGC recognition of online degrees. Globally, India stands as the second-largest market after the US, with strong potential to become a hub for affordable, scalable digital education

Objects of the Issue

The company intends to utilize the net proceeds from the fresh issue primarily for three purposes. Around Rs 81.00 crore has been earmarked towards marketing, brand building and advertising to strengthen visibility and scale customer acquisition. A further Rs 45.00 crore will be deployed towards repayment or prepayment of certain borrowings to reduce debt and interest costs. The remaining funds will be used for general corporate purposes, supporting overall growth and operations.

SWOT Analysis

Strengths: Asset-light aggregator model; deep institute network (IIT/IIM and global); strong EBITDA (FY24–FY25 ~33 per cent); improving PAT margin ~20 per cent; high RoNW track record.

Weaknesses: Negative operating cash flows in FY24–FY25; working-capital intensity/receivables growth; dependence on partner institutions; regional/customer concentration risks.

Opportunities: Rapid TAM growth in online degrees and executive upskilling; expansion of partnerships/programme portfolio; cross-sell to working professionals.

Threats: Competitive intensity from edtech and HEI platforms; regulatory/UGC policy changes; demand cyclicality; continued partner concentration and receivable build-up.

At a Glance

Financial Performance Tables

1. Profit & Loss (Rs crore)

Balance Sheet (Rs crore)

Working Capital & Cash Flow (Rs crore)

Peer Comparison

*NA – Due to negative earnings PE is not available

*NA – Due to negative earnings PE is not available

Outlook & Relative Valuation

Jaro Institute demonstrates a robust financial profile, scaling revenues from Rs 122.10 crore in FY23 to Rs 252.30 crore in FY25 with EBITDA margins of ~33 per cent and PAT margins of ~20 per cent. On valuation, the IPO is priced at 38.2x P/E and 24x EV/EBITDA (FY25 basis). While this is higher than NIIT Learning Systems (19.4x P/E, 10.4x EV/EBITDA), it reflects Jaro’s superior return profile—ROE of 35.8 per cent and ROCE of 39.9 per cent, significantly above peers. In contrast, Veranda Learning and CL Educate continue to struggle with losses and weak return ratios, underscoring Jaro’s relative strength.

That said, concerns remain around negative operating cash flows and receivable build-up, which could impact near-term liquidity. Nevertheless, the company’s asset-light model, high returns, and strong partnerships position it well to capture growth in India’s expanding online higher-education TAM. From a long-term lens, the premium valuation is justified by profitability and scalability, though short-term listing gains may be capped by working-capital intensity.

Recommendation

Subscribe (Long-Term). The company’s strong partnerships, premium programme mix, and superior profitability provide visibility for sustainable compounding. While the current valuation of ~38x FY25E EPS factors in execution, it remains defendable given the business quality and the long growth runway.