Ankur Rudra, a stock analyst at Ambit Capital, knows how to call it like it is. In January 2011, the then 29-year-old stuck his neck out by putting a ‘sell’ rating on Infosys, a company that had been the blue-eyed baby of the Indian stock market for nearly two decades.
It would take nearly a year-and-a-half for the rest of the analyst and investor community to come round to Rudra’s point of view, that Infosys was being valued too highly in the context of its growth potential. Of course, by then its stock had shed nearly a third of its value, so everyone had the benefit of hindsight as well.
In February last year, Rudra stopped tracking Educomp Solutions, the largest education services firm in the country. “I’d been pessimistic about the company since 2009, but by 2012 there just wasn’t enough trading in the stock for it to be of commercial interest to any stock broking firm,” says Rudra.
Sangeeta Gulati too had been bearish on the stock. Of the 35 transactions she undertook in Educomp between 2007 and 2012, nearly two-thirds were sales, and in almost all cases undertaken within a fortnight of acquiring the shares.
By May 2011, Educomp had delivered all the hardware to Sanskaar, ready to be installed and configured.
“That was the beginning of the downfall of their stock. When Educomp saw growth slowing down because they’d penetrated most premium ICSE and CBSE schools, a better way would have been to educate the market and make itself more sustainable instead of changing their accounting model by using a private company to book revenue upfront,” says Rudra.
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(This story appears in the 19 April, 2013 issue of Forbes India. To visit our Archives, click here.)
Just now, I sent a query without my mobile no. My mobile no. is 09819547740. Thanks. Bhagavatheeswaran
on Sep 6, 2014In good faith, I bought 300 shares of Educomp 2 years back @ Rs.152/-. The Current Market Price is about Rs.33/-. The total notional damage is Rs.35,000/-, too high a loss to book for a senior citizen (I am now 76 years old) like me, without considering the inflationary aspect. My DP suggests to accept the reality and exit. Please advise me. Thanks. Bhagavatheeswaran
on Sep 6, 2014Educomp is a big time blunder, trust me I have experienced it personally, it has the most worst and unprofessional management who I don\'t know how but managing schools and they are more than worst when it comes to payments no matter how good you are in giving them services they wont pay you single penny unless you beg them not less than a beggar. even municipality schools are better than educomp Schools. It is nothing but simply a show-off to the students and there parents.
on Dec 26, 2013Educomp is a big time blunder, trust me I have experienced it personally, it has the most worst and unprofessional management who I don\'t know how but managing schools and they are more than worst when it comes to payments no matter how good you are in giving them services they wont pay you single penny unless you beg them not less than a beggar. even municipality schools are better than educomp Schools. It is nothing but simply a show-off to the students and there parents.
on Dec 26, 2013Had read a report by Anavaran Investment in mid 2011 highlighting bearish points on Educomp with following rationale which have been found to be true now. Operating margin of more than 50% looks supernormal and will be surely come down to around 30% in coming 4-6 quarters. We can see signs of business being commoditised which will pressurize margins. More so with relatively low investment and technology barrier that the business model entails making it easy to replicate for others. A single digit PE might have lured but with anticipated decline in margins, price to sales of 3 looks bit expensive. A major chunk comes from products sold to school.This is a segment most likely to fall prey to lower prices. The company\'s business from higher level education centres is on declined Debt is on rise. Big gap between cashflow from operations and net income hints for problems with credit cycle, or worse accounting manipulation. Not happy with Management quality, have done some preliminary reading on them . Its pure luck that they are in business. Left to themselves, Shantanu Prakash would most probably be in Event Management. Perhaps not a big issue but the president sold all his shares on 22 July. Not a morale bosster for investors.
on May 21, 2013Finally Educomp is going to cutoff the employee that is clear from the manager side that they got the mail from HO and as per the mail that inform the employee about to search the new jobs because after one month company will not pay and fire the employee it clearly means that resign from the job for employee....very bad
on May 14, 2013Educomp will not provide any SCC to any new school with reference to new Decision of Borad and old SCC will be remove very soon...
on May 16, 2013Educom is a disaster., Look at Greatlakes , a business school, it acquired paying fancy price. They scaled up the school throughput without , teaching infrastructure, and necessary approvals from AICTE. They had approval for 180 students, but took on board over 360 students. There was visible tension with students, and at the end of the year over 70 students were not placed. Bad word spreads faster, and the input of students this year is less than 360. Dr. Bala Balachandran who was the original promoter has moved away from active involvement. The branch-co-branded school they opened in Gurgan , near Delhi is a bigger disaster. More than anything else, complete disregard for the AICTE approvals , and admitting double the number of permitted students , speaks volumes about the absence of corporate governance. When the regulator (IF AND WHEN) wakes up the school will be in for a large surprise, or will end up like the Everron story of dealing with the IT dept.
on May 13, 2013Educomp was seriously overvalued, it is true. But to do it is considered an art now-a-days. We also heard there were income tax raids on educomp last year. Nothing about that nor the outcomes was mentioned in the article. Why arnt more details about employee exits mentioned? Exodus of employees is one of the key idicators of bad management and what is going on inside. Journalists should cover this part in detail. I dont consider Educomp to be a clean company however i also dont consider Forbes to be doing good clean journalism. The taste and the heading of this article were biased. Similarly Forbes wrote about top influencers in Education a few months back and portrayed Suneet Tuli of Datawind as a messiah with a great vision in Education.Again Datawind had an exodus of employees, it couldnt meet govt deadlines for 2 years continously, the consumer forum cried out loud about substandard products of Datawind but the journalist just ignored all of that. Is Forbes and its journalists a brand image creating/breaking company? Where is real journalism heading towards?
on Apr 19, 2013Gone are those days when journalism was about balanced, well researched articles. The 21st century it seems is about raking in the moolah with as much sensationalism as possible. I was reading an article few days back where the International Finance Corporation had put its weight behind the future of the company in question, based on certain facts of course. And here, this is an article that seems prejudiced towards making a claim that is purely sensational in nature, and not based on facts . And with Mohandas Pai of all people, who incidentally happens to be the director of a rival firm, jumping in to score brownie points, the credibility of what we read and trust is just thrown out of the window.
on Apr 16, 2013Gulati\'s portrayal as some sort of pseudo-Nostradamus predicting the company\'s doom seems nothing more than sensationalism. I highly doubt the impartiality of this write-up. The only place where it sounded credible is where the writer harps on the feeble performance of a small part of the company. This piece could have been better researched and impartially written!
on Apr 15, 2013Its not abnormal to go through periods of rise and fall and Educomp is no exception. But it seems the author has gotten all pumped up in his educomp-bashing exercise! It almost seems there is bias against Educomp in this article.
on Apr 12, 2013It is not Educom bashing. Please visit Greatlakes, and you will realise that the school in 2012-13 had taken in 360 students as against approved 180. , and collected 15 lacs from each. Outg of this 70 remain unemployed on the date of the convocation. Where is the moral standard of the promoters. Such institutions should be banned immediately. AICTE , like the railway board is part of the story.
on May 13, 2013Its really sad to see such an Institution going down the drain so fast. As an individual and as a parent with interest in the education sector, what I knew was that Govt of India is quite serious and keen to support this sector. I only hope that Educomp gets back it lost glory and serves the Country as it used to.
on Apr 12, 2013Management promotors are not trust worthy says ex Global Scholors CEO to me personally ,who sold for 140 million USD,what else we need .
on Apr 11, 2013I wish the company should come on track with new ideas
on Apr 9, 2013Any technology is redundant in 6 months. that is the reason why the technology developers sustain their business and innovate continuously. I wonder how educomp or tata or HP or any other company is missing to see this point. Children get bored of things too soon. so basing a business on quick boredom is the biggest risk any of these guys are taking by investing on the tech. All said and done, technology is actually not the way..... wake up people, good and prompt service always stands long.
on Apr 9, 2013There is still a huge untapped market for Education in India - at the bottom of the pyramid. Rural and under-priviledged population would benefit edu-tech companies a lot more even with basic technology and software investments. Providing jazzy boards and graphics to the gang already equipped with iPads and likes is akin to feeding a stomach that\'s already bloated. Educomp\'s core competency is \'enabling\', they got it all wrong the moment they decided to get into \'funding\'.
on Apr 9, 2013We use SMART Class\'s every day in our class\'s,being into service industry and Children Education - Companies cannot do this....becouse the final suffering is to our chidren
on Apr 8, 2013One company who got away smartly out of this over valuation for education business is Tutor Vista. Pearson will have hard time explaining the acquisition of Tutur Vista for Rs.500 crores.
on Apr 8, 2013hi , i feel very sorry to read this article..., what is the furture of this product and moreover the fate of the employees and the schools who are the customers with educomp>> will they get support from the company further??? udhay.C.
on Apr 8, 2013I feel it\'s disaster to see the economic condition of the Educomp.I am really worried about children
on Apr 8, 2013No worries, TATA has a good solution called CLASS EDGE compared with the competitors in the industry. The major focus will be on critical thinking and creative thinking
on Apr 8, 2013Tata Class Edge is one of the worst solution ever possible, as they have been providing scanned content instead of digital content, there are 100 of dissatisfied schools who have opted for this solution just on tata brand name. School must try out Next Education \"Teachnext\"
on Apr 10, 2013