Excelsoft Technologies Ltd. IPO: Invest or avoid?
·
Excelsoft isn't a one-day gamble gimmick, but a
long-term wealth creation story in EdTech amid growing focus on AI-based
digital education.
KYC: Know
your Company
Excelsoft Technologies Limited (ETL) is a 25-year-old
AI-powered vertical SaaS (Software as
a Service) provider headquartered in
Mysuru, Karnataka. ETL is one of India’s leading EdTech companies of end-to-end
digital learning and assessment solutions for enterprises, universities, governments,
and certification bodies across 19 countries, impacting over 30 million
learners annually. ETL is an
India-based service provider in digital education. Established in 2000, ETL is focused
on the learning and assessment (L&A) and Learning & Development
(L&D) market worldwide. ETL primarily provides EdTech solutions across
diverse L&A segments through its cloud-based platforms. ETL was founded in
Mysuru, Karnataka, back in 2000 as a humble software service company. Over the
years, the company has continuously innovated and has successfully developed
AI-based products & services that help it stand out in the multi-billion-dollar
digital L&A market.
Company
History & Key Milestones
·
CY2000: Founded
by Technocrat Dhananjaya Sudhanva as Excelsoft Technologies Pvt Ltd in Mysuru
as a Private Limited Company (LLP)
·
CY2001–2008:
Built business relationships with custom e-learning content & early LMS for
reputed big global publishers like Pearson and McGraw-Hill.
·
CY2008: Launched
SARAS (Scalable Assessment and Response Analysis System) – India’s first
home-grown enterprise assessment platform and continuously enhanced with AI and
cloud capabilities.
·
CY2010–2012:
Established subsidiaries in the U.S., the U.K., and Singapore
·
CY2015:
Pioneered AI-based remote proctoring; i.e., remote supervising candidates
during the exam process with its flagship product EasyProctor
·
CY2018: Achieved
₹100 Cr (Rs 1 billion) milestone revenue; became net
debt-free
·
CY2020–2022:
COVID lockdown opportunities – remote assessment & proctoring demand
surged; added AI (artificial intelligence) and ML (machine learning)
capabilities
·
CY2023: Launched
its own custom Generative AI suite- AI-Levate by leveraging GPT-4o, Claude, etc
for content & assessment automation
·
CY2024: Converted
to a Public Limited company; onboarded marquee Independent Directors (S.
Ramadorai – ex-TCS CEO, Lt. Gen. Rajesh Pant – ex-National Cyber Security
Coordinator), ensuring standard corporate governance ahead of planned IPO in
2025
·
Late CY2025:
Launched maiden ₹500
Cr IPO; consisting ₹180
Cr fresh issue (equity dilution) and ₹320 Cr OFS by promoter Pedanta Technologies Pvt Ltd
Sound
Management credibility
FTL’s founder & CEO is an experienced,
low-profile technocrat who believes in execution rather than storytelling. The
management has also restricted the board by bringing in three independent
directors, having immense credibility; one is an ex-TCS CEO. This is in line with
ensuring proper corporate governance post IPO. FTL is not a first-generation
30+ founder startup story with a rosy PR campaign, but a mature, understated
team that has quietly built a profitable niche global SaaS business revenue
model over two decades. For long-term investors, such credible &
impeachable management is a comfort rather than a concern about 'obsolescence'.
Business
Model
ETL has mainly a B2B (Business to Business)
marketing strategy rather than B2C (Business to Consumers) in the global EdTech
market. ETL provides cloud-based platform solutions of its L&A and L&D
products & services to both private and public clients in the B2C segment
led by educational institutions, various government departments, corporates,
and MSMEs. ETL has unique integration of generative artificial intelligence (GAI)—from
proprietary large language models (LLMs) to device-specific small LLMs and AI
bots—that personalizes content, automates assessments, and enhances user
experiences. ETL’s Mysuru facility is a 100,000+ sq. ft. hub that employs over
1,000 professionals, including software coders, EdTech experts, and AI
engineers, with energy-efficient data centers and a content digitization
process.
Business
vertical and FY25 revenue contributions:
·
Assessment & Testing Platforms (~40%): SARAS, custom item banks, high-stakes testing, adaptive
engines
·
Learning Delivery & Management (~30%): Platform/product like EnablED LMS/LXP,
CollegeSPARC (student analytics), Openpage (digital eBooks)
·
Professional Services (~15%): Custom development, content digitization,
migration & implementation
·
AI-Powered Proctoring & Analytics (~10%): EasyProctor (remote + live), behavioral AI, predictive
analytics; now Fastest growing segment
·
Generative AI Solutions (~5%): AI-Levate micro-apps – automated item generation,
personalization, grading, and integration across
·
85% Recurring revenue: SaaS subscriptions under 3–5 year contracts
·
15% Project-based: Custom services & one-time licenses
·
Global EdTech market size: ~$350 billion at present (2025); expected to grow
~20-30% CAGR to ~$650 billion by 2030; present revenue of ETL $0.03 billion
implies huge scope for gaining market share
ETL is a growing player in the ~$350 billion global
e-learning market, which is poised to grow at a ~20-30% CAGR in the next five
years for an estimated $650 billion by 2030. It's a major beneficiary of
digital world transformation and remote L&A after COVID. ETL offers the
entire e-learning ecosystem, including content creation, assessment, analytics,
and delivery through AI-Powered Apps. It has Test and Assessment Suite like
EasyProctor, Collegesparc, Openpage, and Learning Experience Platform (LXP) -
Enterprise-grade tools for corporate/business training- focusing on continuous
upskilling. ETL is a leading SaaS (Software as a Service) provider in digital
education; it has proprietary AI-powered e-learning platforms. ETL has a
cloud-based remote content delivery model where applications are hosted by a
provider and made available to users on a subscription basis, eliminating the
need for local installation or maintenance, like Google Workspace and Microsoft
365.
ETL is an
export-heavy company; almost 91% of
revenue comes from export (global) and 9% from local (India) operations. ETL
has 76 big enterprise clients across 19 countries, led by the USA, the UK, and
also India, Australia, Singapore, Japan, Saudi Arabia, UAE, and Canada. Foreign
clients include big names like Pearson Education (US/UK), AQA Education (UK),
Ascend Learning LLC (US), and Brigham Young University-Idaho (US). The US (61%)
and the UK (24%) alone contribute around 85% of total revenue.
Indian
revenue comes primarily from both
private & public enterprises, in higher education, K-12, and vocational training,
led by institutions like Excel Public School and various state education
boards. Indian & global operations provide revenue stability amid Trump
policy uncertainty. India constitutes only around 8% of total revenue for
Excelsoft; it’s a growing market. The Indian government is focusing on digital
education and AI-supported EdTech solutions in public and private educational
institutions. The Indian and South Asian/African/American and APC digital
education market is expected to grow multifold. ETL has a diverse global &
local B2B client base from K-12 schools, higher education, vocational training,
and corporate L&D (Learning & Development) through long-term contracts
(3-5 years), ensuring revenue visibility and stability.
Leadership
Strategy
·
Focus on core
operating margin in a sustainable business/revenue model
·
Focus on tech
talents & innovations to stay ahead of the curve
·
Loser operating
& employee cost advantage at Tire-3 town like Mysuru as primary R&D and
delivery hub compared to Bengaluru
·
Almost 15% of
revenue is reinvested in R&D annually, with a core focus on Gen-AI
·
Maintaining
impeccable corporate governance
SWOT
Analysis: Strengths, Weaknesses, Opportunities, and Threats
Strengths
·
25-year credible & proven track record, AI innovation, and financial prudence, enabling
scalable growth in a high-margin model.
·
AI-Driven Product Innovation & Differentiation: Proprietary platforms like SARAS (assessment
engine), EasyProctor (AI proctoring), and AI-Levate (Gen-AI micro-apps)
integrate LLMs (e.g., GPT-4o, Claude) for adaptive learning and bias-free
monitoring. This reduces client costs by 30-40% and drives 15% annual R&D
spend, earning Industry awards like Brandon Hall and e-Assessment Association.
·
Global Footprint & Blue-Chip Clientele: Serves 76 clients across 19 countries (e.g.,
Pearson Education; AQA UK, Ascend Learning USA), impacting 30M+ learners.
·
Operational Efficiency: Less IT-crowded Mysuru HQ (1,118 employees)
leverages cost advantages; cloud-native (AWS/Azure) with 99.9% uptime SLAs.
·
Robust & Sustainable Growth Trajectory: Last five years (FY21-25) revenue growth R/R
indicates 20% growth in core revenue and 25% core operating EPS growth for the
next five years (FY26-30) as base case scenario (potential market growth 30%
CAGR), AI adoption, and rapid global & local expansion; Core operating
margin is stable at around 30%; Lower debt/equity ratio, ensuring a strong
balance sheet
·
AI Leadership: Proprietary LLMs and generative AI differentiate it from generic EdTech
players, ensuring predictive analytics & personalization and learner
(customers) retention.
·
Diversified Global Marketing initiative is mitigating geopolitical risks and over-dependency
on a single market like the US (~61%) and the UK (~24%).
·
Scalable SaaS Model: Recurring revenue from subscriptions (85% of
total) ensures revenue visibility, also resulting in lower operating costs in
client retention
·
Export Heavy Model: 90% of revenue comes from export; potentially
higher USDINR in the coming years (95-100) should help the bottom line
Weaknesses
·
Client Concentration: Top 10 clients account for 65% of revenue; losing
a major like Pearson could dent earnings by 20-25%; Pearson alone contributes
~59% of US revenue; While resilient, Excelsoft's reliance on top ten clients
and developed markets (US/UK) exposes operational vulnerabilities.
·
Overdependence on the US (61%) and the UK (24%); any geopolitical issues may impact the overall
revenue adversely.
·
Trump policy uncertainty: U.S. President Trump's MAGA policy may impose 25%
tax/tariffs on all types of remote service into the US from 2026 onwards;
almost 60% of ETL revenue comes from the US alone. Trump's austerity policy for
U.S. education may also be a big risk for all e-learning companies, including
FTL.
·
Talent & Scale Constraints: 12% attrition rate in AI specialists; Mysuru
location limits top-tier hires. FY25 revenue (₹249 Cr) is smaller than peers like MPS Ltd (₹727 Cr), signaling scale-up needs.
·
Tech Obsolescence and a potential AI bubble; it has to invest heavily in research &
innovation.
·
Competition from big techs like Google Classroom AI
·
Regulatory Hurdles: Evolving data privacy laws (EU-GDPR, India's DPDP
Act) could hike compliance costs by 10-15%, especially for proctoring tools
handling sensitive biometrics.
·
Promoter Liquidity via OFS: ₹320
Cr OFS (64% of issue) by Pedanta Technologies reduces stake from 94.6% to ~70%,
potentially signaling partial exit; corporate guarantee (₹300 Cr for promoter loans) adds contingent
liability (to be settled post-OFS).
Opportunities
·
The global & local EdTech boom offers Excelsoft a reasonable market share
opportunity of $650 billion global market by 2030 (@25% CAGR); present share
less than 0.01% at $0.03B revenue vs $350B global market size.
·
Explosive Market Growth:. Post-IPO- ₹180 Cr will fund Mysuru expansion (30% headcount
growth), IT upgrades (2x data transmission), and APAC/Middle East marketing
push (40% revenue boost via 25+ new clients)
·
AI & Digital Upskilling Surge: Enterprise L&D ($10 billion opportunity);
integrations like VR/edge computing for adaptive assessments. Partnerships
(e.g., IIT Ropar AI lab) and M&A in content startups could accelerate
25-30% CAGR.
·
India's EdTech Hub Shift: $10 billion domestic market; post-Byju's
regulatory clarity favors B2B SaaS. VC redirection from China (~$10-15 billion)
bolsters local innovation.
·
Sustainability & ESG Tailwinds: Energy-efficient data centers align with global
mandates; potential for impact investing in equitable education
·
The Chinese EdTech Crackdown: Advantage Indian
EdTech: No meaningful competition
from Chinese EdTech companies as of now because China does not endorse
commercialization or monetization of its universal free public education
system.
Threats
·
Rapid tech evolution and macro pressures like an all-out Trumpcession
could erode Excelsoft's AI/digital moat if unaddressed.
·
Intense Competition: Global giants (Coursera Enterprise, Docebo, and
ProctorU) and Indian peers (MPS Ltd, HurixDigital, and Mercer-Mettl) vie for
share; Chinese low-cost AI (20-30% cheaper) threatens APAC. Blackboard/Pearson
expansions pose direct overlap.
·
Technological & Regulatory Obsolescence: Fast AI shifts risk outdated tools; compliance
with evolving privacy laws (e.g., GDPR fines) could inflate costs.
·
Potential delays in Mysuru facility upgrades due to supply chain constraints.
·
Macroeconomic Volatility: EdTech budget cuts in recessions; Trump policy
uncertainty may impact revenue from the US, contributing almost 60% of overall
revenue
·
Execution & Market Dynamics Change: 78% FY25 revenue from publishing/testing sectors
vulnerable to digital adoption in economic slowdowns, as such, digital EdTech
spending
·
OFS exit:
promoter stake sale may deter market sentiment if perceived as a lack of
confidence, despite potential usage of loan repayment
Recent
Strategic Initiatives
·
AI Product
Launches and Enhancements
·
Corporate Governance
and Leadership Strengthening, including Board overhaul
·
Partnerships and
Market Engagements with various public and private educational institutes and
corporates for the delivery of educational and training content
·
SEBI Approval
(July 31, 2025): Nod for ₹500
crore IPO (down from initial ₹700
crore DRHP in March 2025), reflecting refined growth focus amid flexibility
Excelsoft
Technologies-IPO
Excelsoft Technologies Ltd (ETL) is set to debut in
the booming Indian IPO market on November 19, 2025.
·
The IPO has the
price band fixed at Rs 114 to Rs 120 per equity share.
·
The issue
combines a fresh issuance of equities worth Rs 180 crore (equity dilution) with
an offer for sale (OFS) of Rs 320 crore for an exit route, partially for the
promoters and other stakeholders.
·
The issue
combines a fresh issuance of Rs 180 crore (equity dilution) with an offer for
sale (OFS) of Rs 320 crore.
Primary
Objectives of the IPO: CAPEX for Expansion in a Growing Market of Digital
Education
The ETL IPO is strategically timed to capitalize on
the global & local EdTech boom, where digital and AI LA&D (learning,
assessment, and development) are no longer luxuries but necessities. The AI bot
is now the new private Teacher/Tutor (Guru), replacing the need for human
teachers and even text & reference books. ETL is raising INR 180 crore to
expand & upgrade its digital/AI infrastructure for sustainable growth.
Promoters currently hold 94.60% (pre-issue) and will have a significant
controlling stake even after the OFS, indicating robust insider confidence. As
outlined in the Red Herring Prospectus (RHP), key objectives of the IPO include
targeted CAPEX to enhance operational capacity and digital edge. Overall, ETL
aims to boost its backend operations to reduce frontend latency by 40% and
upgrade fresh client onboarding from the current 10-15 annually to 25+ for a
true global SaaS provider in the growing digital education ecosystem.
The primary
IPO proceeds (INR 180 Cr) will be focused mainly on CAPEX for physical and digital infra expansion/upgradation,
energy sustainability & affordability, and overall operational resilience:
·
Expansion of Mysuru Facility: To acquire land and construct a new building at the
existing Mysuru facility to support growing manpower and R&D labs
requirements; to be allocated ~INR 72 Cr.
·
Upgradation of Existing Electrical Infra at Mysuru
facility to ensure reliable 24/7
power backup, crucial for uninterrupted cloud operations and data centres; fund
to be allocated ~INR 40 Cr.
·
Upgradation of digital infra to support increasing AI adoption and data volume;
funds to be allocated ~INR 55 Cr.
·
General Purposes: The balance of around INR 13 crore will fund working capital,
strategic inorganic/organic expansions, diversifications, and marketing focus
into untapped markets like the Middle East and Southeast Asia.
·
OFS Amount of
Rs 320 crore will be for the selling shareholders/promoters, and at their
discretion, may not be invested back into the company; but it may also be used
to repay company debt, and organic & inorganic expansions and
diversifications by the promoter group.
Will the
IPO Funds Help the Company's Growth?
Post-IPO, one can expect ETL to strengthen its
operations, ensuring scalability and sustainable growth. Mysuru facility
expansions will ensure dedicated AI labs, slashing development cycles from 18
to 9 months. It will also encourage innovations like VR-integrated assessments.
IT infra upgrades will handle 2x data throughput, enabling penetration into
high-volume markets like corporate compliance training (projected $10B
opportunity). With low debt, funds can pivot to marketing, aiming for 100+ big
enterprise clients by 2027; it may also go for partnerships with various social
media platforms like LinkedIn L&D. ETL
management eyes a 25-30% CAGR in revenue through FY28-30, margins expanding
to 35% EBITDA via economies of scale. Globally, vertical SaaS like Excelsoft's
is tipped to dominate, with AI reducing costs by 30% in LAD.
Peers
comparisons
Financial
statements: FY21-25 and projections for FY26-28
Fundamental
Outlook: Quantitative Analysis
·
Average revenue
growth: 19% (FY: 21-25); Projected revenue growth 20% (management/market
guidance 25-30%)
·
FY25 core EPS
INR 6.90; average R/R: 37.5%; projected R/R for FY26-28: 25%
·
IPO price: 120;
Core PE: ~17
·
Average Sector
PE: 25; Average Company PE: 22
·
P/E:
Worst-Base-Best-Bubble case: 15-20-25-30
·
Projected EPS
for FY26-28 (assuming ~25% CAGR): 8.60-10.70-13.40 (Equity dilution after IPO
issue)
·
Projected median fair value targets for FY25-28:
154-193-241-302
Conclusion:
Excelsoft may be net Positive for Long-Term Investors: Overall strengths (AI moat, financials) and opportunities (market tailwinds) outweigh weaknesses/threats, positioning Excelsoft for 25-30% CAGR amid EdTech's renaissance. However, client and market concentration (US/UK) are key risks. Excelsoft is not a celebrity consumer EdTech play like Byju’s, PW, but a B2B powerhouse delivering mission-critical SaaS solutions for enterprise LAD. Excelsoft isn't a one-day gamble gimmick, but a long-term wealth creation story in EdTech amid growing stress on AI-based digital education.
Excelsoft
Technologies IPO: Subscribe (BUY/ACCUMULATE)- IPO price 120
Short/mid-long term average best case fair value: 154/193-241/208
Article
sources: Company RHP, company websites, and internal research
https://www.sebi.gov.in/filings/public-issues/nov-2025/excelsoft-technologies-limited-rhp_94797.html
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