Focus on education cheers IT firms

BUDGET IMPACT

The Budget focus on Sarva Shiksha Abhiyan (SSA) is expected to increase the adoption of information technology (IT) and innovative methods for teaching.

This, coupled with the announcement of further investments in the education sector, had an immediate impact on the stocks of IT firms providing e-learning solutions. For instance, Everonn Systems, NIIT and Aptech were up 3 per cent, 4.5 per cent and 3.5 per cent, respectively, within a few minutes of trading on Friday.

Shantanu Prakash, MD, Educomp Solutions, said, "The effect will be clear only in the third and fourth quarter. But the announcement of 6,000 high quality model schools means an opportunity to provide professional development, teacher's training course and delivering relevant content digitally."

He believes the allocation of Rs 4,554 crore for secondary education is a major boost. Of this, an estimated Rs 1,500 crore is expected to be spent on digitised content distribution.

Educomp is already working with 6,000 schools in the country and hopes this number to go up. "We have been growing at 120-150 per cent. With this announcement, we are sure to maintain this growth in the next fiscal as well," added Prakash.

Saurabh Kaushal, industry manager, Frost and Sullivan (South and West Asia), feels that the 20 per cent increase in education spending will have a positive impact on the IT hardware and telecom sector. Harit Shah, research analyst, Angel Broking, said, "The announcement is certainly positive. On a long-term basis, we see good visibility on some of these firms."

Core Projects is yet another firm that will directly benefit from these announcements. "Under the model school concept, we are looking for delivering education in a way that engages students. Our sales and marketing team is already working with several state governments on this front," said Hari Iyer, director, Core Projects and Technologies.

Currently, almost 65 per cent of its revenues comes from the education sector. In 2008-09, the company expects education to contribute close to 80 per cent.