Training institutes that prepare you for engineering and other assorted entrance tests have been around in India and its nook and corner ever since it became fashionable for Indian parents to keep up with the Joneses even on the education front. Amidst this, Career Point witnessed dream listing on the Bombay Stock Exchange. Actually, even better than a dream listing: it rose 104% on the first day of its listing, meaning it more than doubled on the first day. Moreover, the first day saw 15 million shares being exchanged, making it one of the most active stocks on the BSE.
Rajasthan-based Career Point provides tutorial services for various entrance examinations, including the highly competitive engineering and medical exams for admission into India’s premier colleges.
But is this justified? The experts are wary of this development. This means that if you buy the stock at this moment, it is horrendously expensive and you are buying a high risk proposition.
The experts at Mansukh, which provides online share trading services and online equity trading services, warned to be careful about buying the stock. Companies like Career Point and Firstobject Technologies Ltd enjoy a lot of attention due to “an e-education buzz,”, but there was definitely some profit-taking risk with the stock.
How did this happen in a supposedly rational market? Could this be because of some extra liquidity in the market that day? Or could it be because of a boom in online equity trading services in the recent years? Chances are this is because of the buzz around e-education industry today.
One reason e-education companies are at this stage today is because of the hunger of an Indian student to educate himself/herself better – if only for encashing better opportunities in the job market.
For example, world leaders in satellite communication, Hughes Education, have started their India operations in providing education through satellite channels in real time. They have joined hands with big ticket institutes like IIMs, MICA and IITs among others to provide Executive MBAs so that people can work and study MBAs simultaneously.
It is in this environment that Career Point got listed. But it is not even an education institute in the classic sense. It is a tutorial service. Tutorial services business is too localised. For them to go pan-India, it will take some time to establish leadership.
For the present, Career Point has indicated that it intends to utilise the proceeds (Rs. 115 Crore) to meet costs of construction and development of an integrated campus facility and to build classroom infrastructure.
One reason that Career Point is poised for profitability is that it has a franchise-based business model, which will not require significant money to be invested upfront, experts at Mansukh indicated.
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