India Ratings and Research (Ind-Ra) has maintained an optimistic outlook for the education sector in the financial year 2024-25, driven by several factors, including growing enrolments and rising tuition fees per student.
The rating agency anticipates that the increasing income of the middle class and the growing demand for quality education will lead to higher spending on infrastructure development and modern facilities in educational institutions.
Ind-Ra highlights the significance of digitalization, distance education, and e-learning content in shaping the Indian education landscape, considering these factors as key positives for the sector.
Moreover, the rating agency points out the evolving group structures in the Indian education sector, the availability of financing options such as private equity investments, and various government initiatives as factors contributing to the sector's growth in the coming years.
Ind-Ra emphasizes the potential of foreign direct investments by private equity and venture capital players to further stimulate the Indian education market.
Despite facing challenges and regulatory complexities, the sector has attracted significant foreign investments over the past decade, with a notable compound annual growth rate (CAGR) of 7.76% from 2012-13 to 2022-23.
Ind-Ra expects the revenue base of educational institutions to expand, driven by an increase in tuition fees per student, which remained unchanged during the COVID-19 pandemic for some institutions. However, some not-for-profit entities have not revised fees post-COVID-19.
Based on these factors, Ind-Ra has revised the rating outlook for educational institutions in its portfolio to Positive from Stable for the financial year 2024-25, anticipating an uptick in enrolments as the demand for courses offered by these institutions continues to rise.
