28 Jun 2009, 0246 hrs IST, Anand Rawani, ET Bureau
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NEW DELHI: Call it a new chapter for equity investors. Those who betted on education companies a year ago made ten times more return than those
preferring the conventional route of investing in Sensex companies.
Big-ticket investors, including private equity players and high networth individuals (HNIs), have been betting on the potential of the sector as it has begun to witness actions from the government too.
During the last one year, major companies—Aptech, CMC, Educomp Solutions, Everonn Systems India and NIIT—from the education sector gave a return of more than 10%, against less than 1% of return from the Sensex companies.
Post elections, the equity market has performed well and so have the Sensex companies. But interestingly, wealth creation by these companies is seven times more than that of the Sensex companies in the last one month itself.
On a collective basis, these five companies appreciated by more than 21% against 3% gained by the Sensex during the same period. Also, these companies have outperformed the Sensex in a three-monthly return basis.
We at SundayET could say we told you so. Refer to our special report of March 29 this year, where we identified the education sector as the one to watch out for. We had found that most private educational institutions across the country saw the slowdown as an opportunity and were in expansion mode.
Most private universities across the country that we spoke to had reported a surge in demand among students for academic courses, be it short-term or long-term. There was also an increase in the demand for short-term skill enhancement courses.
And now we find that PE players, too, are eyeing this segment. Milestone Religare Investment Advisors, a private equity company, is all set to invest around Rs 50 crore in the next 2-3 weeks in the education sector. "We are in advanced stage of talk and hopefully the deal will be finalised in a few weeks’ time," said Milestone Religare Investment Advisors managing partner Rajesh Singhal.
Also, according to the data provided by Milestone Religare and SMC Capitals, there were two major private equity deals in the education space in June. Pearson invested around $12.5 million in TutorVista, which is into online tutoring.
Also, Educomp and Pearson set up a 50:50 joint venture, where Pearson invested around $17.5million. The new venture company will be into vocational training. Besides Helion Venture Partners and Navis Capital Partners invested in two other player of the education industry, Global Talent Track Company and Edutech, respectively.
The HNIs perhaps have been the earliest to catch on. HNIs have been increasing their stake continuously in these companies since September 2008. They had around 79 lakh shares or an average holding of 3% in these companies in September last year. As per the current shareholding pattern, their holding has gone up to 1 crore shares or an average holding of 3.6%.
Several new initiatives are set to follow. Kapil Sibal, union minister for human resource development (HRD), has already announced the 100 days’ programme and the guidelines on public private partnership (PPP) in school education will be announced soon. It is also going to broaden the use of Information and Communication Technologies (ICT) by connecting secondary schools and distance schooling through broadband.
Hi Why is this stock going down, i have expected that as the education sector is good i have take 1000 shares at 183.50. Can you tell me what is the future of it. will if go up after now of after the budjet.
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