| Indian School of Business | ||||
| Rating reaffirmed at 'CRISIL AA / Stable' | ||||
| Rating Action | ||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||
| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL AA/Stable’ rating on the long-term bank facilities of Indian School of Business (ISB).
The rating continues to reflect the institute’s strong brand, healthy business risk profile and improving financial risk profile, which is supported by healthy networth and robust debt protection metrices. These strengths are partially offset by limited track record vis-a-vis global peers.
Revenue increased to Rs 545 crore in fiscal 2022 from Rs 284 crore in fiscal 2021, which saw deferment of admissions in flagship post graduate programme (PGP) and low registration for other courses owing to the Covid-19 pandemic. Operating performance significantly improved in fiscal 2022, supported by better occupancy, focus on diversifying course offerings and higher fees. In the first half of fiscal 2023, performance has been healthy with revenue registering healthy ~50% year-on-year growth driven by higher student intake in the flagship PGP and other executive and certification programmes, along with higher fees. Profitability will remain healthy (~25%), albeit some of the costs have returned with re-opening of campuses, because of cost-saving measures taken over the past two fiscals.
ISB is projected to undertake capital expenditure (capex) of Rs 300-400 crore over the next 2-3 fiscals towards infrastructure. High cash and cash equivalent (incl. investments) of ~ Rs 855 crore as on March 31, 2022, along with healthy cash accrual of Rs 170-180 crore and nil debt obligation should comfortably cover its capex requirements. |
Analytical Approach CRISIL Ratings has considered the standalone business and financial risk profiles of ISB. |
Key Rating Drivers & Detailed Description Strengths:
ISB has established itself as one of the top business schools in India. It has partnerships with globally recognised schools such as The Wharton School of the University of Pennsylvania (Wharton), The Kellogg School of Management of Northwestern University (Kellogg) and The London Business School (LBS). ISB offers quality management education facilitated by renowned visiting faculty drawn from the top international business schools. It had 928 students in its flagship PGP programme in 2022, compared with 687 students in fiscal 2021. Strong demand enables the institute to increase fees periodically. Moreover, the institute has been able to sustain its healthy placement track record, with average salaries comparable with other top business schools of India.
The financial risk profile will remain comfortable over the medium term supported by absence of large, debt-funded capex and nil debt obligation. Networth was strong at Rs 918 crore as on March 31, 2022 (Rs 762 crore as on March 31, 2021) and gearing comfortable at 0.02 time as on March 31, 2021 (nil as on March 31, 2022). Cash and cash equivalents (incl. investments) rose to Rs 855 crore as on March 31, 2022 as compared to Rs 568 crore as on March 31, 2021, backed by improved financial risk profile.
Weakness
The first batch of ISB graduated in 2002. With 22 years of operations, the institute's track record of operations is small compared with most established business schools. Its long-term growth prospects will depend on the success of its alumni and its ability to maintain corporate acceptability of its graduates across economic cycles. |
Liquidity: Strong Liquidity will continue to be healthy supported by the absence of term debt obligation. Cash and cash equivalents (incl. investments) stood at Rs 855 crore as on March 31, 2022 (Rs 568 crore as on March 31, 2021). Expected cash accrual of Rs 165-180 crore in fiscal 2023 should be sufficient to meet capex and working capital requirement. |
Outlook Stable ISB will continue to benefit from its strong brand and donations from Board members. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Institute ISB was set up in 2001 by a group of Fortune 500 entrepreneurs. It has campuses in Hyderabad and Mohali; the institute in Mohali became operational in 2012. It offers PGP in management, PGP for senior executives and family business management programme as well as several executive and certification courses. It has academic alliances with LBS, Wharton and Kellogg. |
Key Financial Indicators
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||
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This Annexure has been updated on 24-Feb-2023 in line with the lender-wise facility details as on 15-Nov-2022 received from the rated entity.
Criteria Details
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