Monday, March 15, 2010

UMESL - Educating Gen Next

Usha Martin Education & Solutions Ltd (Bse Code : 532398, formerly Usha Martin Infotech Ltd) belonging to the Usha Martin (Jhawar) group has ventured into the schools education space in India.

UMESL plans to have 12 schools operational from the next acedemic year starting April 2010 (primarily in West Bengal, Bihar & Jharkand), moving up to 50 schools in operation from April 2011, and further scaling up to 200 schools in a span of 5 years. Each of these schools will provide K-12 (kindergarten to 12th standard) high quality English medium education to students all over the country, with a focus on non-metro towns and cities.

UMESL has tied up with Pearson India, of the Pearson group to source educational content. With Pearson, a world leader in education publishing, the UMESL enabled schools will have the advantage of accessing their rich digital and non-digital K12 contents like books, worksheets, assessment tools and resources for teachers as well as their state-of-the-art ERP software for school systems

Usha Martin Academy, which runs three centres in West Bengal and Jharkhand for advanced management and technical education, with plans to launch several more, has also been brought under the UMESL fold.

Websites of UMESL  :-

Websites of the Pearson Group  :-

Recommendation :

UMESL can be picked up on declines, strictly for a 5+ years holding period. While the opportunity is indeed humungous, the business model needs better understanding & the execution skills will require close monitoring.

Investors should note that the face value of the share which is Rs 5/- currently will fall to Rs 1/- due to the writing off of certain loss making businesses against the share capital & reserves. At Rs 28.70, it is discounting its effective face value 29 times, which is extremely steep. However looking at how quickly it has been able to start it's first dozen schools (within a few months of it's announcement of entry into schools education) & also keeping the humungous potential of the sector in mind, an initial investment can be contemplated.

Once the business model of the company is studied & understood in more detail, a further call can be made.

Author : Bosco Menezes

Recommendation Date : 14.3.2010

Disclaimer/Disclosure : At the time of writing this article the author has a position in the stock covered by this report. The author or any of his dependent family members may make purchases or sales of the securities mentioned in the report while the report is in circulation. Readers/recipients of this report are strongly advised to do their strict due diligence, and should be aware that the value of investments can go down as well as up. The author shall not be liable for any direct or indirect losses arising from the use of the contents of this report, and readers are therefore cautioned to use the information contained herein at their own risk. In fact, readers would do well to seek the advice of a qualified independent advisor. The author certifies that all of the views expressed in this report accurately reflect his personal views about the subject company at the time of writing this report. Feedback / brickbats may be hurled at the author at .