Education companies performing bad in market, do these companies have any future?
The major company operating in education sector is Educomp Solutions Limited. The company saw a big run in stock price but currently is trading at a very low price.
Company saw a big fall in its revenue continuously. In Q3 2013 the revenue of company was only 60 crore, a drop of 110 crore compared to Q3 2012.
Does these companies really have a future or will erode the investors money?
Another company operating in same segment is Edserv Infosystems Limited, this is the major spoiler in market. Touched a high of 300 and is currently trading at 2Rs.
The revenue of company in Q3 are only 14 Lakhs, company entered in an agreement with Caclubindia for providing Online Coaching. But the revenue have not jumped.
The Education sectors in India is believed to be bright, but falling revenue and negative cashflow in the major Educomp have raised a doubt in business plan of these companies.
More than revenue part if we look at the segment which these companies are operating. The segment is technical part of education.
The companies does not provide any improvement in the education system or the improvement in the way the teaching is done.
These companies provide technical assistance and are only a medium to transfer the tution from teachers to students.
The problem started for these companies when revenue started sinking.
There are 100 of small companies doing the same things. Institutes have their own technical teams now days.
Developing a medium to transfer education data is no more a rocket science. Easy availability of small companies doing the technical service in this segment is favourable to institutes. Institutes hire these agencies and make their own transfer mediums.
A faster internet speed and availability of technical professional have made things very simple. Why will any institute share his revenue with these comapnies when institute can create their own technical classrooms.
The more difficult time is yet to come.