Investing in IPOs has become increasingly prominent in recent years, as investors have been attracted by strong listing gains and post-listing returns. This has made the segment more attractive, encouraging several companies to tap the capital markets to raise funds.
However, companies with strong fundamentals, an expanding market presence, and improving operating leverage have eventually emerged as wealth creators, multiplying the investments of early investors and turning them into long-term success stories. One such stock in this regard is Shanti Educational Initiatives.
IPO investors see 23x wealth creation in 10 years
The company was listed on the Indian stock exchanges in June 2016, with its IPO price fixed at ₹90 per share. The IPO had a lot size of 1,600 shares for retail investors, requiring a minimum investment of ₹1.44 lakh at the time of the issue.
The company had reserved 50% of the issue for retail investors. Investors who were allotted one lot in the IPO and continued to hold their shares have seen their investment multiply significantly over the years, aided by the company’s stock performance and subsequent stock split.
The BSE SME IPO had a lot size of 1,600 shares, meaning an investor allotted one lot would have received 1,600 shares. Following a 1:10 stock split in July 2022, the number of shares would increase to 16,000, without changing the overall value of the investment immediately after the split.
At the IPO price of ₹90 per share, the minimum investment required was ₹1.44 lakh. With the stock currently trading at around ₹207 per share, the post-split value of the 16,000 shares would be approximately ₹33.12 lakh.
This means the original investment of Rs 1.44 lakh would have grown to around ₹33.12 lakh, representing a 23-fold increase over the 10-year period. In absolute terms, the investment would have generated a gain of around ₹31.68 lakh, excluding dividends, taxes, and other transaction costs.
Q1 net profit jumps over 180%
For the June ending quarter (Q1FY27), the company reported a 7.5% year-on-year rise in revenue from operations to ₹16.30 crore, compared with ₹15.16 crore in the same period last year. However, revenue declined sharply on a sequential basis from ₹23.17 crore in the March quarter.
Total income stood at ₹16.33 crore, compared with ₹24.51 crore in the previous quarter and ₹15.27 crore in the year-ago period.
At the operating level, EBITDA rose 4.4% YoY to ₹4.31 crore, compared with ₹4.13 crore in the June quarter last year. The EBITDA margin stood at 26.5%, down from 27.2% in the year-ago quarter, but significantly higher than 9.2% in the March quarter.
Net profit stood at ₹2.82 crore, down 2.7% from ₹2.90 crore in the same quarter last year but surged 187% sequentially from ₹98.4 lakh in the March quarter.
Disclaimer: We advise investors to check with certified experts before making any investment decisions.
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