India's Education Sector Set for 11-13% Income Growth Over Next Two Years

The report from Crisil Ratings said that this fiscal will mark the sector's fifth straight year of double‑digit growth, driven largely by higher spending on education by households as incomes improve, the report said.

It said operating margins are expected to remain steady at 27-28 per cent as institutions will incur higher staff salaries and other related costs, the report said.

The report added institutions will incur capital expenditure to create capacity and improve infrastructure, but credit profiles should remain stable as strong cash flows limit reliance on external debt, the report said.

The analysis of 107 institutions accounting for almost Rs 26,000 crore income showed that with rising enrolments, the institutions will also incur capital expenditure to create additional capacity and improve infrastructure.

"Credit profiles will, however, remain stable as strong cash flows will limit reliance on external debt," the report said.

The report said that the K‑12 segment accounting for about one third of sector revenues, is expected to grow 9-10 per cent supported by urbanisation, affordability and annual fee revisions, the report said.

Higher education enrolment growth for arts, science, commerce and diploma courses is expected to remain moderate at 3-4 per cent, while engineering and technology‑related courses will drive stronger income growth, the report said.

"Engineering courses continue to log healthy demand-this is despite some turbulence in the job market amid the global slowdown and issues related to visas and immigration restrictions in the US-resulting in higher growth in total income," it said.

Himank Sharma, Director, Crisil Ratings, said that fee escalations are primarily driven by higher inflation, especially in the urban areas. However, increasing spending on staff salaries and facilities will prevent any improvement in operating margins, he noted.

- IANS