Education & Training Industry Analysis

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Must know facts:

With approximately 28.1 per cent of India’s population in the age group of 0-14 years, as per latest census in 2015, educational industry in India provides great growth opportunity.
The country has more than 1.5 million schools with over 260 million students enrolled.
In 2015, with 34.2 million students enrolled in approximately 48,116 colleges & institutions for pursuing higher education. India’s higher education segment is the largest in the world.
The education industry in India is estimated to reach US$ 144 billion by 2020 from US$ 97.8 billion in 2016. Gross Enrolment Ratio (GER) in higher education reached 24.5 per cent in 2016. Government has a target Gross Enrolment Ratio of 30 per cent to be achieved by 2020.
Indian literacy rate is estimated to be at 75 per cent shortly, as compared to 63 per cent in 2011.

Source : UGC, Ministry of HRD

Influencing Factors for price change:

Increase/decrease in Gross Enrolment ratio is a significant parameter that could influence education stocks. Government’s initiative on Right To Education (RTE) policies, will help in education for all complimented with better facilities.

Growing ambition of rural India to pursue education on priority, the urge factor as i see has certainly increased, with the penetration of mobile phones. Monitoring this general sentiment helps in determining the education trend.

Increased awareness to be multi skilled, is certainly one parallel trend that is growing along with general education trend. The sector throws open doors for various skill based trainings, depending on individual’s interest & capacity.

Understanding the Industry:

India holds an important place in the global education industry. The country has more than 1.5 million schools with over 260 million students enrolled and about 751 universities and 35,539 colleges. India has one of the largest higher education systems in the world. Around 35.7 million students were enrolled in higher education in India during 2016-17.However; there is still a lot of potential for further development in the education system.

India has become the second largest market for e-learning after the US. The sector is currently pegged at US$ 2 billion and is expected to reach US$ 5.7 billion by 2020. The distance education market in India is expected to grow at a Compound Annual Growth Rate (CAGR) of around 11 per cent# during 2016-2020. Moreover, the aim of the government to raise its current gross enrolment ratio to 30 per cent by 2020 will also boost the growth of the distance education in India.

The problem of primary education in India is mainly a rural one, since 82.7% of the India population lives in villages. But the British Government developed a centralized system of administration and neglected rural areas. Even at present also it is very difficult to provide and organize primary education effectively in rural areas, as school units are unusually small, adequate staff is expensive, the condition of life is not attractive to teachers, schools are scattered and their inspection is not easy and difficulty to secure regular and prolonged attendance of children. Another great difficulty is encountered because of the absence of good roads and means of communication.

Estimated Market Size:

The education sector in India is poised to witness major growth in the years to come as India will have world’s largest tertiary-age population and second largest graduate talent pipeline globally by the end of 2020. The education market in India is currently valued at US$ 100 billion and is expected to nearly double to US$ 180 billion by 2020.* Currently, the school segment is valued at US$ 52 billion and contributes 52 per cent to the education market in India, higher education contributes 15 per cent of the market size, text-book, e-learning and allied services contribute 28 per cent and vocational education in manufacturing and services contributes 5 per cent. Higher education system in India has undergone rapid expansion. Currently, India’s higher education system is the largest in the world enrolling over 70 million students while in less than two decades, India has managed to create additional capacity for over 40 million students. It witnesses spending of over Rs 46,200 crore (US$ 6.93 billion)

Road Ahead:

The Education sector in India is poised at a crucial stage in its growth. India’s demographic advantage of having a large population of youth, coupled with low gross enrolment ratios, presents a huge opportunity to education sector players.

At the same time, the growth of the Indian economy and upward movement of income levels is boosting spend on Education, which already accounts for the second-highest share of wallet for middle-class households.

Additionally, a tremendous interest from entrepreneurs and private equity players is generated due to:

Steady cash flows
Recession-proof nature of the sector
Negative working capital requirements

Government support for the sector has also seen a boost, with substantial reforms and increased financial outlays being announced and implemented. These reforms aim at not only strengthening the sector but facilitating planned expansion of the sector. The interplay of all these factors has made Education an attractive sector with multiple opportunities, as can be seen by the high growth many players are witnessing and pursuing.

– Article by Suman Adithya Rao (SEBI Certified Research Analyst, Management Graduate in Entrepreneurship & Small Business Management)
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Top Stocks in the industry:

Training : ZEELEARN, NIIT,

Education Publishing : S Chand and Co, Repro India, Navneet Education, MPS.

(Please note above stocks are not recommendations, they are purely for information purpose only)

Information Source / References: UGC, Ministry of HRD, EY publications,DIPP,The Economic Survey 2016–17, 17-18, Agricultural and Processed Food Products Export Development Authority (APEDA), Department of Commerce and Industry, Union Budget 2017–18, Press Information Bureau, Ministry of Statistics and Programme Implementation, Press Releases, Media Reports.

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