Rising Enrolments, Fee Hikes To Drive Education Institutions’ Growth By 11–13%: Crisil

New Delhi, Jan 13 (KNN) Educational institutions are expected to record 11–13 per cent growth in total income in the current fiscal year and the next, driven by rising enrolments and fee increases across segments, according to a report released by Crisil Ratings on Monday. 

Margins to Remain Stable Despite Cost Pressures

Operating margins are projected to remain stable at around 27–28 per cent, even as institutions face higher expenditure on staff salaries and related costs. 

Crisil Ratings said increased spending on human resources and facilities is likely to offset the benefits of higher fee collections, preventing any significant improvement in margins, reported PTI.

Capacity Expansion and Credit Profile Outlook

The report noted that rising enrolments will necessitate additional capital expenditure to expand capacity and improve infrastructure. However, credit profiles of educational institutions are expected to remain stable, supported by strong internal cash flows that will limit dependence on external borrowings.

Crisil Ratings Director Himank Sharma said overall income growth would be supported primarily by fee revisions, alongside modest increases in enrolments. 

He added, "Fee escalations are primarily driven by higher inflation, especially in the urban areas. Despite this, increasing spending on staff salaries and facilities will prevent any improvement in operating margins, which are expected to remain stagnant around 27-28 per cent."

Segment-Wise Demand Trends

The K–12 segment, which accounts for about one-third of the sector’s revenues, is expected to grow at a steady rate of 9–10 per cent. Growth in this segment is being supported by increasing urbanisation, improved affordability and regular fee revisions at private schools.

In higher education, engineering courses continue to witness healthy demand despite challenges in the job market arising from the global slowdown and visa and immigration-related uncertainties in the United States. 

In medical education, demand for undergraduate MBBS courses continues to exceed supply, while enrolments in nursing, pharmacy and physiotherapy courses have shown moderate growth.

Crisil Ratings said the government’s focus on expanding undergraduate and postgraduate medical seats and strengthening education infrastructure is expected to support enrollment growth in medical courses in the near term.

Financial Metrics to Remain Healthy

Crisil Ratings Associate Director Nagarjun Alaparthi noted, "The credit profiles of educational institutions will be supported by strong cash flows from rising fee collections, which will be used for developing infrastructure. Gearing and interest coverage ratios are expected to be healthy at 0.37 times and 7.6 times, respectively, this fiscal, similar to the previous fiscal."

(KNN Bureau)