Veranda Learning Solutions (NSE:VERANDA) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the Veranda Learning Solutions Limited Q1 FY 'twenty seven Earnings Conference Call hosted by Go India Advisors LLP. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Ms. Soumya from Go India Advisors LLP. Thank you, and over to you, ma'am. Good day, everyone, and welcome to q one f I twenty seven conference call of Veranda Learning Solutions Limited.

0:48 We have on call with us mister Suresh Kalpati, chairman and executive director, and mister Mohsen Khan, the chief financial officer. We must remind you that discussion on today's call may include certain forward looking statements and must be there for viewed in conjunction with the risk pertaining to the business. I now request the management to take us through the business update. And post that, we'll open the floor for q and a. Thank you, and over to you, sir. Thank you. Thank you, Sonia. Good afternoon, everyone, and thank you for joining us today. On behalf of the entire leadership team, I sincerely appreciate your continued engagement and confidence in Veranda Learning Solutions. Before I talk about our performance, a word on the environment we are operating in. India's education and skilling landscape continues to see structural tailwinds, growing emphasis on employability linked learning, pricing aspiration for competitive government examinations, deeper penetration of a digital first delivery model, and of course, an increasing willingness among students and parents to invest in outcome oriented programs, whether it is in commerce, academics or in test prep.

1:56 This continues to validate the direction of our Veranda 2.2 strategy, which, as you know, has been built around scalable asset light delivery of high quality outcome driven education. Now against this backdrop, we are pleased to report a strong start to financial year 'twenty seven. We delivered broad based momentum across our portfolio in the first quarter of this year, led by exceptional performance in the commerce and government desperate businesses. But our K-twelve business segment continues to strengthen its foundation through investments in systems, partnerships and brand building that we expect will translate into stronger growth over the coming quarters. On the revenue front, the revenue from operations grew a strong 42% year on year to about INR 150 crores in the first quarter of financial year 'twenty seven, while PAT more than multiplied six fold to INR 34 crores compared to the same quarter last year, up 472% year on year from a INR 5.9 crores in the first quarter of FY 'twenty six, our sixth consecutive quarter of that positive performance.

3:08 Overall enrollments during the quarter grew 35% year on year to about 1.03 lakh students, while collections grew 27 year on year, reflecting a healthy demand and robust execution across all our business segments. Each of these segments is being driven by distinct well defined growth levers. In commerce, we recently launched commerce virtuals, a live and recorded digital delivery format for class 11 and class 12 students, giving us Pan India reach without additional physical infrastructure while continuing to expand our offline network, which now spans incidentally over 105 centers with 15 new commerce colleges and the management in the pipeline.

3:55 This segment continues to be our category leader holding the number one market position across CA, CS, CMA, ACCA, and many other programs that we already offer. In the government test preparation space, growth was driven by the launch of our new offerings, including group one offline programs, junior IAS for students in schools final years and subscription based magazines alongside our raised platforms network of centers and a diverse exam portfolios spanning UPSC, SSE, banking, Tamil Nadu Public Service Commission, Kerala Public Service Commission, and other state public service commission exams. In academics and k 12, we continue to build out our managed schools opportunity, a large and a penetrated market worth over 10 lakh crores across just South India.

4:48 We currently manage six schools with over 5,400 students on an asset light end to end managed services model and are targeting to expand the number of schools that we manage supported by steady occupancy and fee growth dynamics in the coming years. Turning now to the Commerce demerger process. We continue to make good progress and remain on track. The Board approved the composite scheme of demerger in late to T25, and we subsequently filed the scheme with NSC and BSC, receiving their new addiction certificates from both exchanges in January 2026. Following the NCLT Director Code Convene meeting in March, shareholders voted in favor of the scheme at the Code Convene meeting held in April, and we filed the second motion with the NCLT with all appropriate papers that same month.

5:44 The next NCLT meeting is scheduled in Chennai on August 17, which is coming Monday, and we expect the entire process to be completed by possibly the first half of September twenty twenty six, which is next month. Upon completion, J. K. Shaw Commerce Education Limited will be separately listed with every Veranda shareholder receiving one share in the newly listed entity on a one is to one basis at no additional cost, enabling sharper strategic focus, more efficient capital allocation, and long term value creation for all our shareholders. Post demerger, the commerce business will target a significant revenue growth over the next three, four years to product geographic expansion with a long term aspiration of crossing thousand crores of revenue by September by financial year 2030.

6:40 Our strategic priorities and outlook for FY 'twenty seven, our focus is clear and fourfold: expanding our government test preparation business into Karnataka to date the state level competitive exam market, entering the preschool managed operations to deepen our K-twelve value chain and build early brand relationships, expanding our offline commerce college network into an additional 15 new locations that we will manage and establishing an offline presence in North And West Of India, targeting specifically UP, Bihar, Rajasthan and Gujarat to reduce our regional concentration and unlock a large underserved student base. Overall, it's worth stepping back to look at the journey that has brought us here. We just want to conclude by saying that Veranda's revenue has grown from just INR 3 crores in FY 'twenty one to INR $4.81 crores in FY 'twenty six, with total improvements growing from under INR 29,000 to over INR 2.56 lakhs over the same period.

7:45 This growth was built through Veranda 1.0, a phase of aggressive brand and capability acquisition, including CA UPSC course launches, the Edureka acquisition, our BSC and NSE listing in April 2022 and the acquisitions of J. K. Shah classes, Tapasia and several other organizations. We have now transitioned, as I had mentioned in the past, into Veranda 2.0, a phase focused on consolidation, deleveraging and profitable scale, marked by our maiden QIP and the proposed commerce demerger, the divestment of our vocational segment to SNVA Veranda in September of last year and continued progress on the commerce demerger process through FY 'twenty six.

8:32 Taken together, these priorities underpin our FY 'twenty seven guidance of approximately about INR $6.70 crores in revenue, over INR $2.50 crores in EBITDA and about INR 140 crores in profit after tax and positions us well to deliver sustainable profitable growth and long term value for all the shareholders. I would now request Mohsen to take you through the financial performance in detail for the quarter. Over to you, Mohsen. Thank you, sir. Morning, shareholders. Thanks for joining. Let me take you through the financial performance for the Q1 FY 'twenty seven. Revenue from operations for Q1 FY 'twenty seven stood at INR 150 crores, up 42% year on year, supported by strong business momentum across commerce, government and academic segments.

9:26 EBITDA for the quarter came in at INR 54 crores, registering 10% year on year growth, reflecting an EBITDA margin of approximately 36% and continued disciplined cost management. TAD for the quarter increased sharply to INR34 crores, up 472% year on year from INR5.9 crores in Q1 of last year, marking this as our sixth consecutive quarter of bad positive performance. On a segment wide basis, how we're reporting, common test prep delivered a revenue of INR 108.6 crores, up 53% year on year, with EBITDA of INR 42.7 crores, up 58% year on year, translating into EBITDA margin of around 40 percentage, underwriting the segment's strong and improving profitability. Going to government test prep, revenue grew 41% year on year to INR 32.5 crores, with EBITDA improvement nearly INR 4 crores from year breakeven level in the previous quarter.

10:15 The academic segment posted a revenue of INR 12.2 crores, up 22% year on year with EBIT of INR 9.2 crores, which is up by 53% year on year. As we are seeing for FY twenty seven, we are guiding a revenue of approximately INR $6.70 crores with EBITDA of INR $2.60 crores and PAT of INR 140 crores, to last year with a INR $4.82 crores of revenue and INR $20.04 crores of EBITDA and INR $1.30 crores of PAT perspective in FY twenty twenty six. Within this, we expect the commerce business to contribute annual revenue of approximately INR $4.50 crores with EBITDA of around INR $2.15 crores and a PAT of around INR 100 crores. While the non commerce business are expected to contribute revenue of approximately INR $2.20 crores with EBITDA of INR 46 crores and PAT of INR 34 crores based on our current business plan and historical quarterly trends.

11:02 Collections and cash flows remained healthy throughout the quarter, and our balance sheet continues to strengthen following the deleveraging initiative undertaken over the past year. As we look ahead, we remain focused on discipline expansion across our core verticals as we've planned as per... Earlier stated, supported by new geography launches, scaling of offline centers, new course introductions, and improving the digital led admissions and the tying up with the more institutional partnerships and continue operating efficiencies. So we have closed the quarter at good... In line of guidance. This is from the quarterly performance. Somai, you can take it. Thank you. We will now begin the question and answer session.

11:49 Anyone who wishes to ask a question may press star and one on their touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take the first question from the line of Aditya, an individual investor. Please proceed. So we are looking back at the last twelve months. Management has delivered a significant improvement in profitability and has also completed most of the restructuring.

12:39 So what is still missing for the market to recognize these improvements? Is it the JKFC listings, further debt reduction, FX 27 growth or anything else? And what specific milestones for the shareholders to watch that would demonstrate the value creation you have talked about is actually happening. Thank you. Thank you, Aditya. While it's difficult for us to comment on how the markets perform, as you know, it depends on many factors, not just India, but also geopolitical factors worldwide.

13:27 But specifically in terms of what we are and what we want to deliver to the investors is the first, as you mentioned, is the demerger of our commerce vertical. We expect the process to be completed by next month and the listing to happen. I think that should first would be a significant reward because it would be a market leader in its space in terms of pedigree profitability, in terms of the alumni network, in terms of number of centers, number of students, ranks. On all fronts, it's an undisputed market leader in that space. So we expect a significant unlocking of value when that listing happens, which is expected in the next month. The second one is in the non pharma space.

14:15 We continue to build strongly on the other two verticals, which is in our government test prep, where we expect and working towards reaching 100 crores of EBITDA over the next four to five years. And that would create, again, a second level of significant unlocking of value. The third would be on what we are doing with k twelve. While we have stabilized our network in the last two years, you will start us taking very clear action steps to build out the k twelve network in the coming years. Apart from that, the company has a significant stake in SNVA Veranda. As you recall, this is the company to which we moved our Veranda, higher ed business, the Edureka business, the sixth phase. So the entire rotational segment got merged into SNVA.

15:11 And I think, again, there, we expect significant unlocking of value to happen. And I think apart from taking a call that we will continue to stay PAT positive, whether in commerce or non commerce, in both entities going forward. I think now the trend we are setting, we have been able to consistently deliver on our projections and plan. And I think over a period, while we have said this is our sixth consecutive quarter of client positive performance, I think the market will start slowly rewarding based on such consistent performance. So from an investor perspective, we are very focused to deliver value by creating businesses that are significantly scaled both in revenue and profitability in every segment that we are involved in.

16:06 The recognition from the market, I think it's difficult for us to comment, but you can be sure with consistent performance, you will start seeing the market starting to reward such performance going forward. Okay. I understand the confidence, but similar growth expectations have been communicated earlier as well. What would be different this time that gives shareholders confidence that the outcome will actually be different? So I think what we have always been projecting and in terms of being able to meet expectations. I think over the last three years, we have gone through, as I mentioned earlier in the call, through multiple acquisitions and consolidation.

16:57 And quite a bit of the acquisitions was done through structured debt, which were quite pricey, as you would recall. I think when we were going through those steps, the risks were quite significant. We had to complete the entire process through a deleveraging and then ensuring that we refinance the debt with low cost debt. So currently, the debt is at a cost of about 9% to 9.5%, bringing it down from a 17.5%, which we had last year. So while we had showcased the steps projected that this is where we are going, generally, investors react to when it actually happens.

17:43 So now while we have spoken about this even in the last one point five years, now quite a bit of what we had projected at that time, we have completed. And so like in any other market, there is an increasing confidence that when we project, then there is a plan by the management to actually deliver on those projections. So it's a process. It's a confidence building process. We have been delivering based on what we have projected. And when market sees such consistent delivery on projections, it starts favorably reacting. I think that's pretty much where as the management that we can comment at this stage. Okay. Thank you. Thank you, Veranda. Thank you. We take the next question from the line of Prajee Shah from Alpha Capital. Congratulations on a good set of numbers.

18:53 I have few queries. The first one is that can you provide the bifurcation of revenue in commerce between online and offline as well as the EBITDA margins in both of them? On the invoice in Q and A. K? Yeah. Yeah. I'll take that, sir. So we're expecting to have the next year guidance in the four fifty at the same list. Think we expect the offline online speed to be about, like, our offline sales are at almost $1,123.30 crores $3.30 crores, and the offline at $1.20... Online to $1.20 crores. So we are just majoring to offline spread with a hybrid brick and mortar model.

19:40 So splitting, like, two is to three... Two is to one ratio. Three is one ratio. Okay. EBITDA margins for the offline space, one more dot 200%. Offline margins, we stood at peak at 35 percentage, whereas our online sits at 45 to 48 percentage. Okay. And so there... There's almost 50% jump in managed school revenue as per the segment revenue and the financials. So how how much of this was driven by price and enrollment jump? Also, on Y o Y basis, how has the number in managed school increased? Considering this is the... So the student growth enrollments managed schools where we operate, the growth has been by 10 percentage.

20:30 And the additional growth came because in the q one, there will be... Because of the start of the operations of the schools, college managers. There'll be additional sales of books and other services given to the students. Hence, the Q1 will be upper slightly higher revenue by 20 percentage. This too has contributed to the growth in the Q1. Okay. And, sir, the revenue has grown, like, 42%, collections, 27%, and enrollment, roughly 35%. So could you explain the divergence between these three metrics? Okay. So enrollment growth, we are seeing almost 35% growth and well as collections because 25%.

21:15 We are now operating in a subject wise offerings in the commerce space where we offered non... By bulk courses, but we offered course wise... Subject wise classes also. Hence, the enrollment rate, 35% growth whereas in the collection, is 27% growth. And that... And also coming to the collection, you see, we have collected $1.65 crores in the q one, whereas the revenue recognized $1.50 crores. The 15 crores on the advanced... Because of the index one month recognition that has been deferred to the subsequent quarters. And that is the difference. Okay. I said how much of the deferred cancellation for acquisition is pending to be paid?

22:00 And how much how how much is expected payment for 05/27? There are no effort on there. No deferred consideration payouts for next one year. So we are having the structured payouts in the next five years, six six and seven years. In recent next twelve to ten years, there is no deferred consideration payout. And, also, the deferred considerations are based on the respective EBITDA achievement, everything. So Okay. Okay. Okay then. Thank you. Thank you, Tachi. Thank you. We take the next question from the line of Sudarsana Narshima, an individual investor.

22:51 Sir, what is the total debt on the commerce and non commerce? Debt on the commerce is $1.25, and the debt on the noncommerce is $1.45, sir. $1.25 crores and 100 Yeah. 5 you. Crores. Thank you. We take the next question from the line of, an individual investor. Please proceed. I would like to ask, like, once this is both these companies are segregated, what will be the growth driver for Veranda Learning, like, SNVA will be in Veranda. Right?

23:47 But So the shareholding in SNVA will be sitting in the Veranda noncommerce entity. Okay. So that value will accrue into the noncommerce. The commerce business will be all businesses except our government test prep, K12 and the shareholding in S and P. We take the next question from the line of Ishita from XNA. Please proceed. Hi, sir. I had a few questions. So one is despite 42% revenue growth, consolidated EBITDA grew only 10%.

24:36 Could you quantify where the incremental revenue is currently being reinvested or reabsorbed in the cost structure? I'll take this up for a second. So... Hi,. So the reason the reason for growing 10% actually in the last year q Q1 of FY twenty six, there was a onetime other income of 17 crores sitting. So that has because of the remeasurement of financial liabilities, which has come off because of the India's adjustments. If we can adjust that and see the revenue has grown by 30 percentage. EBITDA has grown by 30 percentage. So revenue incremental has been added to top line, but because of this other income, we are seeing only 10% growth in EBITDA. Otherwise, the growth has been almost 30 percentage in EBITDA also.

25:24 Got it. Just to just to add to it, I think in line with the demerger that is expected next month, we have also been spending money on advertising and marketing, the commerce vertical as a stand alone brand. So those spending in advertisement have been also expensed in the first quarter. So that is also leading to a minor depression in EBITDA, which was not undertaken last quarter. But in the first quarter, we have done quite a bit of advertising and marketing to establish our commerce plan. So that has also been a reason for a bit of a dip in the EBITDA margins. The other one is also that we are...

26:11 As we had mentioned in the call, we are adding another 15 managed commerce colleges. So some of the initial work has been undertaken in q one. So those spends have also been expensed during the first quarter. So apart from the one time that had happened, you know, quarter previous, but also due to this spend in advertising and marketing for the establishment of the commerce business as a stand alone entity in line with the expected listing next month and also initial work that's happening in establishing the 15 managed commerce colleges. So they have also been expensed during this quarter. You should see the impact of this, positive impact of this in the growth that we will have in the commerce business in the subsequent three quarters of this year itself.

27:04 Got it. Got it. Sir, my... Another question regarding our finance cost. Now that the large part of the financing benefit has already been captured, what is our sustainable quarterly finance cost we should expect going forward? It's likely 8 crores. It will be 7.7 to 8 crores. Okay. And one last question was regarding the guidance. You are guiding for $2.60 crore EBITDA in FY twenty seven, and if that is implying 56 crore incremental EBITDA over FY '26. So could you give us a bridge for the 56 crore? As in how much comes from revenue growth, margin expansion, and the finance cost savings and cost efficiency?

27:54 So when... So EBITDA doesn't include finance cost. There's no saving in the EBITDA on the finance on finance cost,. So the EBITDA we are expecting is on the two fronts. On the one thing is that so it's been mentioning on the managed college of expansion where we want to start with the new colleges this year from their side. And we have a concept of increasing the ARPU every year around seven to eight percentage. That also gives us that bridge. And the student count to increase by 10 percentage. These two will contribute to that... The difference what we are targeting for the next year. So these are the two critical things we are taking. And one more thing in online space, what we are doing is entering the new market, like eleventh and twelfth commerce.

28:40 We're trying... Starting the digital led programs and also CMA India, we're concentrating. This will also generate the additional new cash inflows into the system. So these are the three steps we are taking. Got it. Thank you. That was all. Thank you. Thank you. Before we proceed, participants who wish to ask a question, you may press star and one on your touchtone telephone. We take the next question from the line of Yash Modi from Ashka Group. Please proceed. Congratulations on a good set of numbers. So my question was with regard to this demerger date. So you mentioned that we expect the listing to happen next month. So obviously, this has been slightly delayed obviously on the part of the court. So I just wanted to know the status of the court, NCLT, the final as the final hearing happened in Supreme Court, where are we in that process? And what gives us confidence that the listing will happen next month?

29:42 So the couple of last hearing, we had a hearing in July twentieth of last month, Josh. So that hearing, it was orders were reserved. So that typically happens when they are close to pronouncing the order. And pronouncing the order is pretty much the last step to the CID. They had come back with couple of queries just this week on what would be the appointed date for the process, which pretty much goes into the order that they gave, and that is being submitted today. And the next year is scheduled on Monday... Coming Monday. Okay. So Got it. Considering that orders have been reserved, we are pretty much in the last stage. So we expect the order to be pronounced very, very soon.

30:34 Typically, the process after that is we sign with the ROC, which is probably three, four days after that. We set up a record date where we give a minimum one week before book closure. After that, we submit the vehicles for listing. We have already been in touch with both the exchanges. We had a meeting with them just about a week ago in Bombay, and we are keeping them fully informed, and they are all geared up for the listing. Perfect, sir. Perfect. Thank you. All the best, sir. Thank you. Thank you, Yash. Thank you. Before we proceed, participants who wish to ask question. We take the next question from the line of Rahul Kothari, an individual investor.

31:24 Please proceed. Yes. Hello. Good afternoon. Sir, congratulations, first of all, those are strong results. So my question is what is the next milestone after NCLT approval, ROC filling listing permission, and what is the timeline for each? So as I've mentioned, the the next meeting with the has been posted for coming Monday. They've asked for some clarifications this week. The affidavit has been prepared. It's being filed today. Since on July 20 itself in the MCLT meeting on conclusion, they have posted the outcome as orders reserved. Typically, when orders are reserved, the next subsequent step is basically pronouncement of the order. I'm not sure how exactly...

32:15 And CLT, I wouldn't want to presuppose as to what they would decide, but I'm just going based on trust precedence that once the orders are reserved, generally, the pronouncement follows. So we... So the next meeting is coming Monday with NCLT. Couple of clarifications here on the appointment date. We have already prepared the affidavit. It's been filed today. So we would expect us to receive orders and subsequently from there in about three, four days. So we expect the orders in all probability to come next week. Three, four days from there, we will file with ROC. We need to do minimum one week for the eight record dates. So it will be one week from there for record date, after which shares will be credited to all the shareholders' accounts.

33:11 So it will be... It to be listed and traded, but you should see the shares credited in the individual DMAT accounts. We will submit the DRHP similar document to the exchange. It's already prepared. We have had a meeting with both exchanges last week, and they are fully geared up for the listing. Any... Typically, in a process like this, unlike an IPO, since the first step of the demerger is to get a no objection certificate for the entire scheme from both exchanges. That is when the MCLT even accepts our application. So since this has been sort of preapproved by exchange, it goes through a distinct process that's very fast.

33:57 So and we believe that we should be able to complete the entire process before end of September. Okay. Okay. Thank you so much. Thank you. Thank you. Before we proceed, a reminder to the participants, in order to ask a question, you may press star and one on your touch tone telephone. We take the next question from the line of, an individual investor. Please proceed. Yeah. I would like to ask, like, whether Veranda in future or doesn't any plans to go in defense training or, like, nuclear? This is because there's a buzzword, and we are doing wonders in this field defense. And nuclear also, we are coming up with so many things.

34:46 So is there any plans for going into this? As far as defense is concerned, typically, it would belong to a portfolio of government experts in which we are there. But are we doing anything specific in defense as of now? Not at this time tonight, but I will take your inputs. We had looked at this space before. We have tried to study the type of volume of recruitment that happens, the type of testing that is required. I think in the current context where there's an increasing spend on defense, possibly the recruiting is also going up. So we will definitely take a look at this space and see if it makes sense for us to enter. But from a larger sectorial perspective, we are already there in government test set. So for us to add defense related courses should be fairly easy and very, very incremental in cost.

35:42 As far as nuclear is concerned, no. We are really not in that space. And I think that's a significant intensive engineering training, and, you know, that's not a vertical where we are there today,. Okay. Thanks. Thank you. Participants who wish to ask a question, you may press star and one on your touch tone telephone. As there are no further questions from the participants, I would now like to hand the conference over to the management for their closing comments.

36:35 Thank you. Thank you to all the shareholders. I think for us, this has been a very important quarter with significant events that have happened. We have made significant progress in the demerger process of our commerce vertical. As I mentioned, we expect this to be completed next month. Sorry to interrupt, sir. We have questions... Last minute request questions. Would you like to take that? Yes. We can. Alright, sir. So we take the next question from the line of Mehul Jain from Siddharth Partners. Please proceed. Hi, sir. My question is to. If you can throw some light on this tax expense, When if we look at the last three quarters, it was in the range of 8 crores per quarter.

37:33 Correct. And if you look at the current quarter, it's going negative to around 3 crores. Negative. Correct. Right? You can help me understand what what exactly has changed here. Yes, sir. So recently, I think we gave in the rectification notes also. What happened in q one? So we had applied for a merger scheme of Veranda administrator and Veranda k two, one of our two subsidiaries. On account of mergers, we had to use our committed losses of the parent top company, and has the tax created in the earlier has been reversed in the current year, sir. So if you have seen the phase of the c and l, we had a 7.35 gross reversal of tax effect earlier year. So on account of that, we had a negative tax reversal this quarter. So there was no DTM there with the right amount? No. No. There are the current tax.

38:19 On account of merger, we we saved on the tax payment this year. Okay. Okay. Understood. Yeah. Understood. And on the second one, on the EBITDA piece, if you look at the trailing EBITDA for past few quarters, it has been, you know, dipping. So if you exclude other income, so more or less, if you look at September 25, it was 36.44, Then it came down to $3,519.06 and $351.05. Current quarter, it is at 30 5... 34.71. So... And we have guided for this year at around 38.8% overall EBITDA. So just wanted to understand, I mean, if this quarter on quarter is going down, then how are we planning to achieve the 38% over the remaining year? If you have seen that, so last year, have with all other income. We had a EBITDA of 42%. Excluding other income. So if you exclude Yes.

39:11 Yeah. Correct. Last quarter, other income last year. Correct. If you exclude other income, so if you look at Q4 last year, it was 35.5. This come down to 34.71. No. This is 55 crores, what we reported EBITDA. Sir, it's a percentage sometimes. Talking about percentage. Percentage, I said. Ah, okay. The percentage wise, because I was saying, I think, for this was mentioning, and the q one, we had the because of the start of the year, financial year, we have colleges, everything with it. We had advertisement expenses spent more this quarter and also the... On the main college expansion. That has... It is the margin, but going forward, we'll be reaching that margin level to to to say, look. Yeah. No,. It's a major decline. I think it's coming on account of the other expense. Other expense, like employee benefit, like, salary fees, the other operating revenue has gone down. I mean, the employee benefit and lecturer fee has gone up.

40:02 Correct. Is it something which is the same quarter on quarter? I mean, this increase will be there over here, or is it cyclical? No. It is variable to the revenue also. On account, see revenue has increased by five seven... One thirty two to one forty nine. So as a proportion of revenue also, this has gone up. Yes. So we're taking... Tracking that numbers, Veranda. So firstly, if I can step in. Sure. Please. Please. As far as the EBITDA margins are concerned, I think some of the reasons that you're finding us in terms of fairly stable EBITDA and EBITDA percentage is going down. Because, you know, for instance, if you look at colleges, we are doubling the number of colleges this year. So there is a certain level of spending that we are doing in this expansion, which is getting expense in the respective quarters.

40:59 So you will see that, well, there is a revenue expansion. There is a spend that we are doing for creating the platform for expansion in the next three, four years. For instance, we are doubling colleges this year. Almost 17, we will... We are adding another 15 more. Also, keeping in mind the demerger that's happening, there is a certain level of advertising spend that we did in the first quarter to establish the commerce vertical under JK Sharma commerce. So that spending has also been expensed in the quarter. So most of the last three, four quarters, we have been setting up the stage for growth. So those spends are being expensed in the respective quarters. So the benefit of that, you will see even in the next three quarters, you will see. And then subsequent years, the ramp up that's coming is because significant capacities are being created, and those expenses are being captured in the previous quarters.

42:00 Understood. So substantial expense portion is taken care of. Now next few quarters, this will EBITDA will continue to go up, which will help you achieve the 38%. Correct. Understood. Thank you, Satish. Thanks. Thank you. We take the next question from the line of from Excel Residential. Please proceed. Yeah. Hello. Sir, the doesn't putting all the debt of the noncomas entity, like, JKS are limited. So listed debt free means the market will value Veranda Residential business is structurally lower multiple or effectively transferring value like... Value to JK Sasser orders.

42:49 So the way we expect it, you know, it's very difficult for me to look at the crystal ball and predict where it will land. But I'm just, you know, saying that the commerce vertical demerger creates an entity that is an undisputed leader in its space. So in e commerce space, as I mentioned earlier, whether it is in terms of profitability, revenue, student base, number of locations, ranks, pedigree, is an undisputed number one in India. So being the market leader, generally, you get higher multiples if you are the leader in the market over and above what the sectoral multiples are. So we expect it to have a much higher multiple than it lists even compared to what Veranda currently gets as a multiple because Veranda is seen as a player in the education sector where clearly we are not the leaders in terms of revenue or for that matter number of years of existence as Veranda as a whole.

43:49 So the JK Shaw Commerce being a leader when it lists will trade at a much superior multiple than what Veranda is trading today, given its leadership position in all forms in that sector. Now as far as the non commerce is concerned, I think the government is prep will carry certain good multiple because we are at about $130,150 crores of revenue. And being one of the strongest players in the South, we should command some higher multiple because it will help us deliver much faster growth. As I mentioned, over the next four, five years, we expect our government vertical to get to about 9,500 crores of EBITDA by itself.

44:40 And that's on the basis of its leadership position in the South. So it should also get multiple. As far as the k 12 space is concerned, as you very well know, managing six to seven schools really doesn't put us anywhere in the top 10 in the leaderboard as far as k twelve is concerned. So I would expect the k twelve to not get the best of multiples. Government districts should get a good multiple. And I think the commerce vertical, when it is demerger, will probably get the highest multiple in that sector. Okay, sir. Thank you. Thank you. Thank you. As there are no further questions from the participants, I would now like to hand the conference over to the management for their closing comments.

45:32 Thank you. So as I mentioned that this has been an important quarter for us. I think we have completed the majority of the steps in one of the key events that we ourselves are looking forward to, which is the demerger and listing of our commerce vertical. As I mentioned a bit earlier, I think this should when it gets lists as a market leader in many facets in that space, it should command a good multiple and very good interest from the shareholders even compared to what Veranda Learning yesterday. Apart from that, I think we have made good progress in SNVA. We made good progress in our government test prep. And I think as far as K-twelve is concerned, we are taking certain very definitive steps, which we will talk about in the next quarter once they start showing results.

46:26 So all in all, it's been a very good quarter. For us, it's a sixth consecutive positive quarter. And again, thanks to all the shareholders who have been with us over the last three, four years and for your confidence that you have laid in us for being able to execute. Thank you once again. Thank you. On behalf of Go India Advisors LLP, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.