Zee Learn share price soars nearly 20% amid debt settlement progress and investor speculation

Zee Learn Ltd. witnessed a sharp intraday rally on May 16, 2025, with its share price soaring 19.97% to close at ₹7.87 on the Bombay Stock Exchange. The surge was supported by unusually high trading volumes, with over 44 lakh shares changing hands, suggesting a strong wave of retail investor interest. This momentum was not driven by earnings outperformance but rather by recent restructuring disclosures and speculation surrounding asset monetization efforts. The stock, long associated with volatility due to legacy liabilities and litigation overhangs, emerged as a key target for short-term momentum traders amid renewed activity in beaten-down education sector counters.

The rally followed the company’s regulatory filing on May 15, 2025, announcing the outcome of its board meeting, where it approved the audited financial results for the fourth quarter and the full financial year ended March 31, 2025. Although the financial results themselves were accompanied by significant audit qualifications, the market appeared to interpret the disclosures as a signal that Zee Learn was moving closer to resolving its lingering debt overhang. This perception, however, may have ignored the deeper structural and legal uncertainties still embedded in the company’s balance sheet.

What Did Zee Learn Report in Its FY25 Results?

Zee Learn’s standalone revenue from operations for FY25 stood at ₹27,384.04 lakh, an increase from ₹25,263.15 lakh in FY24. Other income contributed ₹1,191.97 lakh, resulting in a total income of ₹28,576.01 lakh. On the profitability front, the company reported a net profit of ₹5,418.56 lakh, compared to ₹5,000.60 lakh in the previous year. These headline figures, however, did not reflect the complexity of Zee Learn’s financial situation, particularly the nature of its receivables and contingent liabilities.

The audited financial statements revealed a total equity base of ₹16,283.61 lakh, while total liabilities had expanded to ₹1,00,839.55 lakh, with current liabilities alone amounting to ₹82,119 lakh. The company’s standalone earnings per share stood at ₹1.66 for FY25. A key feature of the balance sheet was the disclosure of ₹69,458.74 lakh as receivable under “other current financial assets”—an amount the company claims is recoverable from four trust entities linked to historic corporate guarantee obligations. This receivable has not been subjected to an impairment test as required under Ind AS 109, drawing sharp criticism from the statutory auditors.

How Are Ongoing Debt Settlements Shaping Investor Sentiment?

The catalyst behind the stock surge appears to be investor interpretation of Zee Learn’s progress in resolving long-standing corporate guarantee issues. The guarantees were originally provided for loans availed by four trust entities and were subsequently invoked by lenders, including Yes Bank and Axis Bank. Over the years, these loans were transferred to distressed asset resolution firms such as JC Flowers Asset Reconstruction Pvt. Ltd. and, more recently, to Assets Care & Reconstruction Enterprise Ltd. (ACRE).

According to the company’s disclosure, a Supplemental Facilities Agreement was signed in November 2024 with ACRE, whereby Zee Learn, its subsidiary Digital Ventures Pvt. Ltd. (DVPL), and promoter entities agreed to settle the outstanding dues of ₹63,436.19 lakh. As of March 31, 2025, the total amount shown as recoverable from the four trust entities stood at ₹69,458.74 lakh, factoring in amounts paid jointly by the involved parties. Zee Learn’s management maintained that monetization of DVPL’s assets and those of the four trusts would lead to full settlement, asserting the receivable was good and recoverable.

The market appeared to price in this optimism, even though neither the receivables had been tested for impairment, nor was there clarity on the enforcement timeline of the asset monetization plan. In the absence of conclusive recoverability evidence, auditors from Ford Rhodes Parks & Co. LLP issued a qualified opinion and noted a material uncertainty over Zee Learn’s ability to continue as a going concern.

What Were the Key Risks Identified by Auditors?

The statutory audit report highlighted multiple layers of risk and accounting inconsistencies. Firstly, the firm noted that Zee Learn had not conducted impairment testing on the ₹69,458.74 lakh classified as receivables from the four trusts. This omission breached the requirements under Ind AS 109, potentially overstating the value of financial assets. Secondly, the auditors criticized the company for not providing any liability against the corporate guarantees invoked by Axis Bank and other lenders on behalf of DVPL. These guarantees relate to credit facilities that were subsequently assigned to ACRE and remain under CIRP review by regulatory tribunals.

Additionally, the auditors drew attention to Zee Learn’s investment exposure in DVPL, amounting to ₹56,455.15 lakh, including equity, preference shares, and intercompany loans. As of March 31, 2025, only ₹21,927.05 lakh had been provisioned toward impairment, leaving ₹34,388.10 lakh in net exposure unadjusted. Given that DVPL is under insolvency scrutiny, with an application by Axis Bank having been admitted by the National Company Law Tribunal (NCLT) in November 2024, the lack of additional provisioning raised serious concerns.

The cumulative impact of these unresolved issues led auditors to question the company’s financial resilience. In their report, they indicated that Zee Learn’s liabilities exceeded current assets, resulting in negative working capital—a critical indicator of short-term liquidity stress.

Is the Spike in Zee Learn Share Price Sustainable?

Despite the stock’s outsized single-day gain, sustainability remains in question. The underlying rally was not backed by institutional buying or a fundamental turnaround in financial strength. Instead, retail-driven momentum and the speculative nature of low-float, low-price education stocks played a pivotal role. The lack of evidence supporting the recovery of key receivables and the company’s heavy dependence on future asset monetization raise doubts about the durability of the current price movement.

Zee Learn remains deeply exposed to the risk of adverse legal judgments and continued operational uncertainty, especially in the context of DVPL’s insolvency proceedings. The company’s valuation has become increasingly difficult to anchor due to its opaque financial relationships with the trust entities and subsidiaries.

What’s Next for Zee Learn Investors?

Looking ahead, the company’s fortunes depend on timely execution of its settlement terms with ACRE, including successful monetization of DVPL and trust assets. Zee Learn has forecasted higher revenue and profit growth in FY26, as per its internal business plan approved by the board. However, execution risks remain high. Market observers are likely to track further regulatory developments, particularly the pending appeal in the Supreme Court relating to JC Flowers and the earlier settlement agreement.

Another key monitorable will be the response from credit rating agencies and institutional investors, especially if the company seeks to refinance or raise capital. Unless a transparent resolution roadmap is communicated and supported by regulatory and legal clarity, Zee Learn’s stock may remain volatile and vulnerable to sentiment-driven swings. The outcome of CIRP-related proceedings and the realization of the large receivables listed on the balance sheet will serve as the most consequential inflection points for investors in the coming quarters.