Brand Lineage Drives Enrolments, Firm Indicators Support Education Sector’s Stable Outlook - India Ratings
cityairnews
Feb 21, 2014 12:00
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Chennai/Delhi, February 21, 2014: India Ratings & Research (Ind-Ra) has maintained a stable outlook on the education sector for FY15 to reflect growing enrolment in the K-12 (kindergarten to twelfth) segment and the gradual expansion of higher education segments. This growth is despite protracted infrastructure upgrades and delayed regulatory reforms postponing benefits. The agency has a Stable Outlook on most of its rated education institutes for FY15 and expects maximal affirmations in Ind-Ra’s rated universe due to consistent enrolments and strong operating margins in FY15.
The muted growth in the private financing of the sector was offset by public investments in FY13. In Ind-Ra’s opinion, market size would slide to INR5,901.92bn in FY15 from its earlier estimate of INR6024.10bn due to expected delays in completion of flagship schemes.
Seasonal fee receipts and delays in fee reimbursements have resulted in tight liquidity for most education institutes. Moreover, the credit profiles of many institutes have been constrained by the absence of policies to monitor liquidity.
While established institutes’ admission procedures and demand flexibility has enabled them to withstand the enrolment slowdown and manage high debts comfortably. Fairly new and financially weak educational institutions are compromising on their admission criteria to counter the enrolment slowdown yielding marginal capacity additions. Additionally, these speculative grade institutes have resorted to fee increases. Nevertheless, their ambitious debt-led expansions with unpalatable amortisation schedules have reduced their debt servicing ability.
Ind-Ra believes timely availability of education loans to students could boost the education sector and provide comfort to enrolments as periodic revision in fees by both the government and private colleges have been eroding affordability.
What Could Change the Outlook
Regulatory Changes: Passage of pending educational bills such as the National Accreditation Regulatory Authority of Higher Education Bill and National Council for Higher Education and Research Bill as well as liberalising the sector would provide the necessary growth impetus. However, it will have a lag effect.
Stagnant Sector Indicators: Stagnation in the sector due to a decline in student-generated revenues and enrolments, and an increasing inability of institutes to pass on higher costs to students could affect the sector.
(Source: Manager – Corporate Communications and Investor Relations, India Ratings & Research -A Fitch Group Company.)//New delhi news, New delhi current news, New delhi news live, New delhi breaking news, New delhi headlines, New delhi latest news, chennai news, india news, world news,
