- Established track record and great range of courses offered in the university
The key trustee of the Unacco Social Development Trust, Sri Ningombam Irabanta Singh has 11 years of experience in microfinance business and promoter of Unacco Financial Services Private Limited. Sri Longjam Shyamananda Singh has 30 years of teaching experience and Mr. Kuber Singh is a businessman by profession. The principal of the school, Mr. Sri Potshangbam Surachandra Singh is a leading academician of the state and has 19 years of teaching and administrative experience of various other institutes. Acuité believes that the trustee’s extensive experience has helped the school to establish its position in the state of Manipur.
- Above average financial risk profile
Unacco School’s financial risk profile is above average marked by moderate corpus fund, low gearing and healthy debt protection metrics. The corpus fund of the trust increased to Rs.31.04 Cr as on March 31, 2022 from Rs.26.13 Cr as on March 31, 2021 on account of accretion to reserves. Gearing remained below unity at 0.54 times as on March 31, 2022 as against 0.69 times as on March 31, 2021. The Total outside Liabilities/Tangible Net Worth (TOL/TNW) stood comfortable at 0.81 times as on March 31, 2022 from 0.87 times as on March 31, 2021. The healthy debt protection metrics of the company is marked by Interest Coverage Ratio at 5.14 times and Debt Service Coverage Ratio (DSCR) at 3.45 times as on March 31, 2022. NCA/TD stood at 0.43 times in FY2022 as against 0.16 times in FY2021. Going forward, Acuité believes that the financial risk profile of the company will remain at comfortable levels backed by steady accruals and no major debt funded capex plans.
- Improvement in business risk position
The trust achieved revenues of Rs.15.25 Cr in FY2022 as compared to revenues of Rs.9.45 Cr in FY2021. Moreover, In 9MFY23, the trust reported gross receipts of Rs.22.33 Cr (prov.) which is supported by revised fee structure and hostel facility resumed from mid Nov’21 in FY22, the topline is expected to improve over the medium term. However, continued focus on cost optimisation resulted in improved the operating profitability margins. The EBIDTA margin has increased to 57.72 per cent as on FY2022 as compared to 44.81 per cent. The PAT margin also increased to 31.72 per cent as on FY2022 as against 9.45 per cent as on FY2021. In 9MFY23, the trust reported gross receipts of Rs.22.33 Cr (prov.) which is supported by revised fee structure and hostel facility resumed from mid Nov’21 in FY22, the topline is expected to improve over the medium term.
Further, In FY22, admission of students increased after Covid-19 pandemic and students also started living in hostel rooms. Currently, the Khongman school, Chanura school and the Meitram school is operating at 100 per cent capacity and is expected to improve further. New admission for session 2023-24 has started and the management expects a good number of new joinees. It is expected to boost the number of student admission coupled with modern infrastructure (hostel) in Khongman and new block C at Meitram, going forward.
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The school is currently undertaking one new block of hostel in Meitram, located in west Imphal on a 4-acre land. The project was started in mid FY20 and will be completed by April FY23. The total cost of the project stands at Rs. 15.14 Cr, which is financed by bank loan of Rs. 7.35 Crore and Rs. 7.79 Cr from promoters’ contribution and accruals.
Further, the school is in process to set up the extension of hostel at Khongman, which is going to be completed by April 2023. The total cost of the project is Rs. 3.4 Cr, which is financed by bank loan of Rs. 1.65 Cr and Rs. 1.75 Cr from promoters’ contribution and accruals.
Additionally, the trust has started capex for a fourth fully residential school, Unacco School Chanung in Impahl east, 30 kms away from Khongman. Manipur faces frequent strikes and hence a fully residential campus will lead to better educational facility. The capex started in Jan 2021 and total cost involved is Rs.23.14 Cr, which is financed by bank loan of Rs. 12 Cr and Rs. 11.14 Cr from promoters’ contribution and accruals. Till April, 2023 ground floor will be completed whereas more three floors is expected to be completed by FY 24. Acuité believes that the school’s ability to complete the project on time without any significant time and cost overruns would remain key rating sensitivity.
- Highly regulated and competitive industry
The education sector is highly regulated with the government deciding on the maximum student intake, fees, mandatory facilities, faculty strength and even faculty salary to an extent. Any adverse government regulations may impact the society’s revenue growth and accruals. The student-teacher ratio is within the stipulated norms for all the institutions. The institutions run by the society faces stiff competition from other reputed institutions in the vicinity which puts pressure to attract fresh students. However, considering that they have an established brand presence and has been consistently producing academic achievements, the society has been insulated from the competition, to some extent. |
