Prosus Tags BYJU’S Fair Valuation At $5.98 Bn

In its half-yearly report, the Netherlands-based investment group Prosus has tagged edtech giant BYJU’S valuation at $5.98 Bn.

“The group accounts for its 9.67% effective interest in BYJU’S at fair value through other comprehensive income. The fair value of BYJU’S investment, subsequent to the loss of significant influence, is $578 Mn,” Prosus said in its report.

If we take the interest that Prosus says it holds versus the investment it has made in BYJU’S in exchange for the said interest, then BYJU’S valuation stands at $5.98 Bn.

Incidentally, at its $250 Mn funding round in October, the edtech giant was valued at $22 Bn, making it one of the most valuable startups in India.

According to BYJU’S financial statements for the year ended March 31, 2021, its revenue stood at INR 2,428.3 Cr ($297.31 Mn). Therefore, the last round’s valuation is almost 74X the edtech’s revenue. However, the fair valuation tagged by Prosus represents a 20.5X multiple of BYJU’S revenue in FY21. 

Interestingly, Prosus also stated in its report that the edtech major’s revenue grew almost 90% in the first half of FY23.

“BYJU’S revenue grew by almost 90%, mainly off the back of these acquisitions and from enhanced offerings such as BYJU’S FutureSchool, which offers one-on-one learning for coding and maths for kids,” the investment firm noted. 

However, that was the last time Prosus looked at BYJU’S accounts, as it lost significant influence after its stake got diluted to 9.67% in the edtech giant. “We have stopped equity accounting for BYJU’S and Udemy from September 2022,” the investment firm said.

Prosus’ observation of the edtech major’s increased revenue corroborates the claims made by Byju Raveendran, the cofounder, that the edtech firm has seen most of its revenue deferred to future financial years.

Even so, the Prosus report would again spark the debate of whether BYJU’S sky-high valuation is justified or not. Several analysts and industry observers have pointed out that a valuation as high as 74X its revenues is not practical. 

However, BYJU’S is yet to raise a down round, pointing to the influence it holds in the market that is poised to reach $10.4 Bn in size by the end of 2025.

BYJU’S remained under scrutiny for the most part of the second half of 2022. After belatedly filing its financial statements for FY21, BYJU’S completed a funding round, took a couple of loans from its subsidiary Aakash, and announced that it would lay off 2,500 employees and wind down operations across India. 

Apart from this, the Institute of Chartered Accountants of India (ICAI) is also looking into the edtech’s finances.