Educational institutions in India are projected to experience an 11-13% increase in total income in the fiscal year 2026 and the following year, driven by rising enrolments and fee hikes, according to a report by Crisil Ratings. This growth trend marks the sector’s fifth consecutive year of double-digit growth, mainly fueled by increased education spending by households as their incomes rise. Operating margins are expected to hold steady at 27-28%, despite institutions incurring higher staff salaries and related costs.
The report highlights that institutions will invest in capital expenditure to enhance capacity and infrastructure, with credit profiles expected to remain stable due to robust cash flows that reduce reliance on external debt. Analysis of 107 institutions, representing nearly Rs 26,000 crore in income, reveals that alongside growing enrolments, these institutions will also boost capital expenditure to expand capacity and upgrade infrastructure.
Notably, the K-12 segment, contributing around one-third of sector revenues, is anticipated to grow by 9-10%, supported by factors like urbanization, affordability, and annual fee revisions. While higher education enrolment growth in arts, science, commerce, and diploma courses is forecasted to be moderate at 3-4%, income growth will be driven by engineering and technology-related courses.
The report emphasizes that despite challenges in the job market and issues like visa restrictions in the US, engineering courses continue to witness strong demand, leading to increased total income growth. Himank Sharma, Director at Crisil Ratings, pointed out that fee escalations are mainly influenced by inflation, particularly in urban areas. However, the rise in spending on staff salaries and facilities is expected to offset any improvement in operating margins.
