Byju's Overvalued??




The Boom of EdTech in India 

As a result of COVID-19, which wreaked havoc across the globe in the last two years, we witnessed a significant transformation in curriculum development and pedagogy. We have transitioned from thinking to actually being digital, which has resulted in the development of various EdTech products and services offering amenities such as one-on-one tutoring, mentoring, exam preparation, and so on. As a result, concerned students and their worried parents turned to online educational platforms. This led to significant growth for edtech firms such as Byju's, Vedantu, Toppr and Unacademy, which saw a significant increase in traffic share during the lockdown. However, with traditional education returning and campuses buzzing with activity, these EdTech platforms have seen a significant reduction in demand for online learning, forcing them to cut costs, lay off employees, and make changes such as establishing online physical tuition centers.

Byju’s burns 2 rupees on every 1 Rs of sale.

The most valuable EdTech company in the world, Byju’s, a division of Think & Learn Pvt Ltd, reported a decline in revenues for FY21 and an almost 20-fold increase in its consolidated losses from Rs 231.69 crore to Rs 4,588.75 crore, according to the firm's financial statement for the financial year ended March 2021. This was the year of acquisitions, which included "fast-growing yet loss-making deals that are increasing the consolidated loss." This includes WhiteHat Jr, a recent acquisition by Byju's, which has declared slower organic growth and its future expansion is likely to require a sizable financial burn. However, it remains to be BYJU's two most promising acquisitions, the $1 Bn purchase of Aakash Educational Services and the $300 Mn acquisition of WhiteHat Jr. On the other hand, a substantial chunk of that could be attributed to a massive advertising budget. Byju's spent approximately 800 crore rupees on advertising in 2020, which included sponsorship for the Indian cricket team and celebrity endorsements. 

 

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