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NIIT vs. Educomp: The right choice? - Views on News from Equitymaster

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NIIT vs. Educomp: The right choice?

Mar 22, 2011

India is a country with the second largest population base in the world. Of this, 572 m people, fall in the age group of 0-24 years. And this population is the target for one of the fastest growing sectors of the country. We are talking about the Indian education sector, which has a student strength of around 230 m currently. And the Indian government is doing all it can to support and boost this number. The budget allocation for education was increased by six times in 11th 5-year plan as compared to 10th 5-year plan. On the whole, the Indian Education Sector is valued at US $ 80 bn currently.

Catering to such a huge Indian educational sector is a great opportunity as well as challenge. A large number of big and small players are vying for a share in the pie of this growing education sector. Among them are some players who are using Information Technology (IT) as a tool to provide learning solutions. IT based learning solutions not only help in reaching out the larger customer base but also in enhancing the quality of education.

Now arises the most important question! What are the good investment avenues among the companies who provide IT-based learning solutions? So we are going to talk about two large companies who operate in this business space. Over the next few articles we are going to compare NIIT Ltd and Educomp Solutions Ltd on the basis of their businesses, their numbers, etc.

At the onset, we would like to clarify that the focus of these articles is to help our readers with relevant information on the two companies. The idea is to provide information so that the investors can decide for themselves as to which is a better company.

Let us start with discussing the basics of the two companies.

Business focus: Products or services?

Though both the companies provide IT based learning solutions, their Solutions' focus is totally different. Solutions of NIIT are mainly training based (instructor-led and supplemented by e-learning). Educomp on the other hand, offers product based learning solutions.

Customer focus

NIIT caters to a large spectrum of customers which includes Individuals, Enterprises, Schools and Colleges. The Company offers solutions like Individual Learning Solutions (ILS), School Learning Solutions (SLS), and Corporate Learning Solutions (CLS) to its customers.

Data source: Company annual reports

Unlike NIIT, Educomp's business is mostly focused towards Schools. It generates close to 90% of its revenue from Schools.

School segmentation

In the school learning business, NIIT has historically concentrated on the government schools. And this had bode well for the company. However, in recent times, the company has faced serious issues in terms of delays in payments. A large part of this was caused by the disconnect between the Central and the State Governments in terms of payments. As a result, NIIT has now shifted its focus towards the private schools to boost its SLS business.

Educomp on the other hand, caters majorly towards the private schools. In addition to this, it also has its own schools in some parts of the country. The Company operates several chains of schools in the high schools and preschool segments like Millennium, Takshila, Vidya Prabhat Schools.

Geographical focus

NIIT derives a large part of its revenues from India and America. It also has an established presence in Europe as well as in different part of the world. On the other hand, Educomp is mainly focused on India.

Data source: Company annual reports

So in nutshell, NIIT is an IT based learning solutions company, mainly focused on training, and caters to broader spectrum of customers. Whereas Educomp, while operating in the same business arena, is focused mainly on learning products. It mostly caters to schools in the domestic market.

In the next article, we will focus on the financial numbers for these two companies.

NIIT vs. Educomp Series - Next | All Articles


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10 Responses to "NIIT vs. Educomp: The right choice?"

md azizul sk

Apr 18, 2011



I am interested to know this answer.

Like 

Ezhilan

Apr 4, 2011

It would be good if we compare Educomp Vs NIIT and Everonn Vs Edserv.. Its like Infy Vs TCS and HCL Vs Wipro in IT earlier years

Like 

vikhyat

Mar 27, 2011

jayesh seems to be putting one more angle and one must look into the governance issue along with the financial. On this issue NIIT seems to have an edge over Educomp.

Like (1)

Jayesh Parab

Mar 26, 2011

Educomp has had lot of governance issues in the past. NIIT on the other hand has been fair. Also Educomp management is known for not achieving set targets.

Like (1)

vivek

Mar 25, 2011

defintely a nicely written article....look forward to have the same in comparison with Everonn....as they are also in the same line and good looking business

Like (1)

Ethos

Mar 24, 2011

This would have actually made a great read if it was a 3 way comparison between Educomp, NIIT and Everonn. Helps investors a lot though. Keep up the good work.

Like (1)

ketan

Mar 22, 2011

i think dhaval soni point of view is right....also NIIT doesnt have high growth rate...educomp will be benefited by introduction of software based education especially in private schools...

Like (1)

Yogesh

Mar 22, 2011

Apart from these two companies one another Chennai based company Everonn is also capturing the huge stake in Indian education sector.

Like (1)

Deepak Jain

Mar 22, 2011

When are you publishing the next article on this?

Like (1)

Dhaval Soni

Mar 22, 2011

According to me in India, government is spending more on Education which can be seen in the recent budget. And the opening of the private schools is increasing in the India and more investment opportunities for the MNCs in India is now open; hence Educomp will be more benefited than NIIT.

Like (1)
  
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