India Investment Blog

No of Colleges in India: Source AICTE, UGC, Planning Commission

India has over 33 thousand colleges. Of these close to 20 thousand colleges are run by private institutions. The balance includes 669 colleges run by central government and remaining are
administered by State Governments. The adjoining graph shows the growth of number of colleges since 1971 (Click on the graph to see the magnified image ).

The following table provides the data on number of universities in India. This is part of our series of posts on Education Statistics in India.

Number of Universities In India
FY71	103
FY81	133
FY91	190
FY01	256
FY07	387
FY12	659

The data source is UGC, AICTE, NCTE, INC and Planning Commission. Of these 152 are Central Universities, 316 are State Universities, and balance 191 are Private Universities.


 

In the interim budget announced today, government proposed to raise expenditure on Education sector by 9% (vs Revised Estimates for 2013-14) . Total Budgeted Expenditure on Education is Rs 81,441 Cr . This includes plan and non-plan expenditure. The breakup and comparison of expenditure is given below.

What is noteworthy is that for next year, the BE is only 9% higher than RE for current year, and is lagging overall proposed expenditure growth (at 11%) for the government. BE for 2013-14 was 18% higher than Actuals for 2012-13.

MHRD
Rs Cr	2012-2013	2013-2014	2013-2014	2014-2015
Plan - Expenditure	Actuals	BE	RE	BE
Department of School Education	42822	49659	47159	51198
Department of Higher Education	12711	16210	14703	16200
Total	55533	65869	61862	67398
Non-Plan Expenditure
Department of School Education	2810	3042	2977	3287
Department of Higher Education	7720	10552	9787	10756
Total	10530	13594	12764	14043
Total Expenditure
Department of School Education	45632	52701	50136	54485
Department of Higher Education	20431	26762	24490	26956
Total	66063	79463	74626	81441

 

MSDF

Gray Matters India Private Limited (http://www.graymatters.in) has received funding from Michael and Susas Dell Foundation (http://www.msdf.org). Gray Matters, founded in 2006, is a Gray Matters Capital incubated firm and focuses on assesments and educational analytics for K-12 schools.

The capital raised by MSDF will be used for developing products, building analytics framework, and will also be used to cater to the operational losses till the company hits break even, said Pradeep Sharma, chief executive officer of GMI.


The company which includes a couple of students from ISB in its top management, operated as a non-profit organisation earlier and decided to change its model to a for-profit company only a year ago. It aims to reach break-even by 2015-16.

The company aspires to reach more than 5,000 schools, 2 million students and 100,000 teachers in the next five years. At present it caters to about 650 schools. GMI plans to to increase the role of assessments and analytics in K12 education and help improve educational quality by making data actionable to schools.

Gray Matters India

“Assessments and school ratings are a big unmet need of schools that target low-income communities and this is a great opportunity for GMI to create industry suitable assessments and a market of quality conscious schools in this segment,” said Prachi Windlass, Lead, Education, at MSDF.




The foundation recently invested in LabourNet Services India Pvt Ltd along with social VC fund Acumen.

Facebook delighted its billion+ followers on its 10th anniversary, with a video link that provided a LookBack on their individual journeys on facebook. The individual curated, roughly 1 minute videos are personalized with the images that each person posted on their profiles through the years including the most liked photographs. Saw several people in my family gushing and happy at seeing their videos yesterday.

Congratulations Facebook. You've just made a personal connection with your billion plus users.

To see your own lookback video visit https://www.facebook.com/lookback/

PS: You need to have posted a threshold number of videos to get a video. Else you may only get a set of photographs.

Here's a snapshot of Enrollment in Higher Education in India and target for 12th Five Year Plan 

• The target is to increase enrollment to about 36 million by 2016-17 (vs 26 million in 2011-12).
• This implies a CAGR of only 6.7% (vs 9.4% achieved in the 11th Plan. 
• ~60% of the additional enrollment is planned from Private HE institutes. 

• Not all the money that would otherwise be invested in the sector would come in 
• Of the money that does come in, a large proportion of money invested would be by people who believe that they can "manage" the system. The outsourcing model that this system compels, leaves not money to be reinvested back in the education system to improve quality of education besides being used to increase the number of seats. 

• Overall outlay increased to Rs 4,537 billion 
• The outlay is up 66% over original outlay of Rs 2,733 billion made in the 11th Plan 
• As per estimates by Planning Commission, public expenditure (centre + states) on Education during the Eleventh Plan was Rs 12,447 billion. 
• Of this 43% was on Elementary Education, 25% on secondary education and balance 32% on Higher Education
• Per Capital Expenditure increased to Rs 2958 in 2011-12 (vs Rs 888 in 2004-05)

India recently revised its GDP growth percentage for FY13 to 4.5% . This happened because the size of the GDP measured for FY12 was raised higher and on this higher base the previous estimate for FY13 thus meant lower growth.

India revises its estimates for GDP three times before settling for a final number and FY13 number could still therefore turn out to be higher. Anyhow, the first reaction to this has been that short term India's economy seems to be in a bigger hold. 5% growth estimate was anyways lowest in a decade. 4.5% growth sounds like a dooms day scenario.

Curiously, what this also means is that whatever is the GDP estimate for FY14, the growth number would be compared against FY13 and on a relative bases the growth number would look rosier than before. Eg. a 4.9% growth number would signal a moderate turnaround in fortunes (vs 4.5%) whereas earlier (vs 5%) it would have looked like a continuing downtrend in growth rates.

I am therefore left wondering if any of this is an exercise in deception (self or otherwise) but is likely to have a positive impact on markets, as GDP growth numbers are announced in the coming quarters. Macro watchers should then cheer and increase their weight-age for investments in India 

The market dividend yield is near long term average at 1.5%. Dividend yield had touched a high of 3.2% in 2003 and a low of 0.6 in 2001. The following graph shows dividend yield of NIFTY since 1999

















The following tables provides the range of dividend yields for NIFTY since 1999

Dividend Yield
Maximum:	3.2
Minimum	0.6
Average	1.5
Current	1.5

The following chart displays P/E trend for NIFTY

















The current P/E ratio for NIFTY is 17.7, which is a tad below long term average of 18.3.

In a surprise move, RBI raised REPO Rate by 25 basis points to 8% today,  in its toughening stance against inflation. This despite the fact inflation, although still very high, had fallen more than expected last month to 9.87%. 

REPO Rate is the rate that at which RBI lends money to Scheduled Banks and is  key interest rate for enacting monetary policy. Increasing REPO rate leads to increase in borrowing costs for banks and hence leads to increasing cost of borrowing by consumers. 

In case banks decide to pass this on to consumers, the interest rates for education loans, car loans, home loans etc would also go up. 

Here's a comparison of returns given by listed education companies since October, 2013

Returns Since October 2014

• Shares of Education companies have outperformed the broader markets, including the IT sector since October 13
• The sector had faced strong headwinds over the last two years as the sector's performance and valuations had taken a hits, disappointing many investors
• Interestingly Tree House and MT Educare, which have been reporting good results, witnessed a moderate decline in share prices as their share prices had massively outperformed the sector. 
• Even after this correction the companies are available at a fraction of their peak valuations over the last few years 
• While the companies have been taking strong steps to deal with the challenges, the questions is whether this is merely a correction or a sign of turnaround

Market Cap of Listed Education Companies

Company Name: NIIT Limited
Last Update: January 22, 2014

NIIT is a leading education and training company based in India. Its present in three primary segments
a) Individual Learning Solutions: Vocational Training in IT, Banking and other services areas
b) Corporate Learning Solutions: Managed Training Services (MTS) and custom content development
c) School Learning Solutions: Provides technology based products and tools to schools

Valuation (at CMP of Rs 28 per share)

• The company appears to be grossly undervalued at current market price of Rs 28 per share
• NIIT owns 23.98% of NIIT Technologies (a mid-tier IT company). The value of these shares is Rs 5880 million, which is more than the current market cap of NIIT Limited. 
• With Net Debt of Rs 632 million (as of December 31), and assuming 25% discount to its holding value of NIIT Technologies, the implied enterprise value of the business is just Rs 841 million
• With a Revenue of Rs 9600 million last year, this is very attractive and is at historically low multiples
• NIIT's margins and profits were depressed in the last 18 months due to slowdown in IT training 
• Still the company had an EBITDA of Rs 530 million which is likely to improve this year. 9MFY14 company has already done roughly 500 million of EBITDA
• What is significant is that its other business segments are beginning to make up for the impact of decline in IT and it appears that the company is turning around (see Q3 results of NIIT)
• The star is the Corporate Training business - which is a niche area of outsourcing and is now over 40% of the business on run-rate basis. NIIT is the only listed company in the area of Managed Training Services and could get a premium as this gains scale. MTS is already 3/4th of NIIT's corporate learning solutions business
• Capital intensity in the business is reducing as reflected by declining depreciation and AR days