Education sector expected to see 12-14% revenue growth in FY25: CRISIL Ratings

09 Oct 2024 Evaluate

CRISIL Ratings in its latest report has said that schools and colleges will report 12-14% revenue growth this fiscal (FY25), riding on higher enrolments, which allows for upward fee revisions, and students scouting for new course offerings. The growth will be despite the high base following three consecutive years of high-teen growth.

It stated improved enrolments and better utilisation of assets should cover increasing salary costs for faculty and other ancillary expenses for new courses and, thereby, aid in maintaining the operating margin at around 28%. Additionally, as existing courses and seats remain highly utilised, educational institutes will continue to make capital expenditure (capex) to improve infrastructure and enhance intake capacities. However, strong cash flow (from higher revenue and timely realisation of fees) limits reliance on debt for capex and supports the credit risk profile.

An analysis of 96 educational institutes rated by CRISIL Ratings, accounting for almost Rs 20,000 crore fee income, indicates as much. Enrolments for the educational institutes in the K-12 segment, largely schools, will continue to rise due to two reasons – rising demand for high-quality education and improved affordability as income levels rise. Besides, it mentioned the government aims to increase the gross enrolment ratio for higher education to 50% by 2035, from under 30% currently, by promoting new institutions while expanding and improving current institutions and increasing penetration among the addressable population. Even as intake capacity increases, utilisation rates for schools and higher-education institutes may improve to 86-87% by this fiscal from 85% last fiscal.