Not Scared Of Valuation Markdown As There Is No Science Behind It: BYJU’S Raveendran

After US-based asset manager BlackRock slashed the valuation of the edtech major earlier this month, BYJU’S founder and CEO Byju Raveendran said that he is not worried about the valuation.

“I think the media is more worried about the valuation than any of us. Why should we be worried about valuation, we are not selling anything. We have been buying more and more. We have been increasing the ownership in the company. We have significantly increased the ownership in the company in the last 12 months,” Raveendran said at an online webinar hosted by Deal Street Asia.

He added that valuation can go up and down and there is no science to it. Moreover, valuation markdowns by some of the investors happen when the macro environment changes and when the public market comparables change.

BlackRock slashed the valuation of the edtech major by nearly 50% to $11.5 Bn on April 1. This is a sharp markdown from the $22 Bn at which the edtech decacorn was last valued in 2022.

The asset manager owns less than a 1% stake in BYJU’S and has marked down the value of its shares in BYJU’S to $2,855 per share from $4,660 per unit.

While decacorn BYJU’S is in talks with investors to raise funding soon, Raveendran said there is no down round happening and the next round will have a flat valuation.

Raveendran is reportedly in talks to raise funds to increase his stake in the startup to as high as 40%. Raveendran would use the fresh funds to buy back as much as 15% of the firm by using his shares as collateral. The CEO currently has a 25% stake in BYJU’S.

As of now, one of the biggest issues for BYJU’s seems to be its mounting losses, which rose nearly 20X year-on-year (YoY) to INR 4,588 Cr in the financial year 2020-21 (FY21), compared to INR 231.69 Cr in FY20. Byju’s revenue from operations grew only 4% to INR 2,280 Cr in FY21 from INR 2,189 Cr in the previous fiscal year. It is yet to file its FY22 report.

BYJU’s acquired WhiteHat Jr, Scholr and Aristotle in FY21. It acquired 76% shares of Whitehat Jr in an all cash-deal of INR 1,327 Cr. With a total loss of INR 1,118.25 Cr in FY21, WhiteHat Jr contributed 26.73% to BYJU’S total loss of INR 4,588 Cr.

Raveendran claims that five of BYJU’s six businesses are profitable. While White Hat Jr is yet to make profits, the company has reduced the cash burn. “We are looking to achieve group-level profitability maybe this quarter,” he added.

As per Inc42’s layoff tracker, BYJU’S has laid off 4,000 employees since 2022 across group companies as it is cutting costs to turn profitable. BYJU CEO, however, said that everyone talks about layoffs and not the 25,000 people it has hired.