‘Subscribe’ to Tree House Education IPO at cut off level:MFSL

MUMBAI: MFSL Research has advised to invest in the initial public offering of Tree House Education & Accessories with a long term perspective. It has recommended to ‘Subscribe’ to the issue at cut-off price.

The company has entered the capital market to raise between Rs 114-129 crore by issuing shares in the price band of Rs 135-153 per share. Retail investors will get a discount of Rs 6 per share.

“In terms of book value of Rs 51, the stock is priced at 2.6x-3.0x compared to industry average of 2.6x. Retail investors will receive Rs 6 discount on issue price. Although valuation suggests fairly valued at given price band but considering the exponential growth, scalable business model and huge market opportunity primarily for organized players along with business model focus on self operated preschool, we suggest it for long term investment.

Hence we recommend investors to ‘SUBSCRIBE at cut off price,” the report said.

It plans to use the proceeds for expansion of pre-school business, acquisition of office space, procurement of exclusivity rights to provide educational services, set-up educational complexes in Rajasthan and Gujarat and for loan repayment.

The issue closes Friday.