Market gloom casts its shadow on Tree House debut

Tree House’s shares made a rocky debut in the markets on Friday, closing 12 percent below the retail issue price of Rs 129. The stock’s price see-sawed during the trading, going up to Rs 161.5 before plunging to Rs 104.15 and finally closing at Rs 116.55.

Founded in 2003 by Rajesh and Geeta Bhatia, Tree House operates in a unique pre-school segment catering to children between the age group of 2-4 years. Since then, it has come a long way, growing from a single school to some 230 pre-schools as on August 26. It uses a combination of owned centres and franchises to expand its chain.

[caption id=“attachment_70510” align=“alignleft” width=“380” caption=“For the year ending March 2012, the company reported a stellar 253 percent jump in net profit to Rs 9.2 crore. Reuters”]  [/caption]

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Tree House entered the capital market to raise Rs 112.6 crore for the purpose of opening 120 new pre-schools by 2014 (Rs 41 crore), constructing educational complexes in Rajasthan and Gujarat (Rs 40 crore), expanding office space (Rs11 crore), along with procuring the exclusivity rights to educational services (Rs15.6 crore).

For the year ending March 2012, the company reported a stellar 253 percent jump in net profit to Rs 9.2 crore while sales rose 83 percent to Rs 39.2 crore. While the promoters’ holding stands at 29.6 percent, private equity players Matrix Partners and Foundation Capital hold 26.73 percent and 8.6 percent, respectively, as of June-end.