Kathmandu. Infomerics Credit Rating Nepal Limited (Infomerics Nepal) has upgraded the credit rating of the educational institution Professional Educators Limited (PEL) to ‘Double B Plus’ for long-term bank facilities and ‘A4 Plus’ for short-term bank facilities. Earlier, the company’s long-term rating was ‘Double B’ and short-term rating was ‘A4’.
The rating upgrade came after PEL’s financial performance improved. In the last fiscal year 2080.81, the company increased its total income by 20 percent to Rs 751 million. Increase in student enrollment and monthly fees contributed significantly to this. Income before tax and depreciation reached Rs 347 million, while the margin of such income reached 56.37% in the first half of the current fiscal year. The company’s profit has also increased from 8.66% in the previous fiscal year to 18.61% in the first six months.
According to Infomerics, PEL’s financial position has strengthened during the review period. The tangible net worth has reached Rs 1.137 billion and the gearing ratio has improved to 1.13x. The company is facing challenges in working capital management. The average collection period in the first half of the year has reached 189 days, while fluctuations in borrowing rates have also increased risk. Competition and regulatory risks in the education sector are also a challenge.
Nepal Life has acquired 35 percent share ownership in this company, which is operating various schools and colleges in the Kathmandu Valley. Nepal Life invested in it at the beginning of the current fiscal year under its investment diversification plan. Nepal Life’s investment in Professional Educators Limited (PEL) is expected to provide good returns for Nepal Life in the medium to long term.
PEL’s continued improvement in financial performance, strong market position, experienced management and partnership with Nepal Life could make this investment profitable. The challenges of working capital management and competitive risks should be taken into account. Overall, Nepal Life’s investment in PEL is expected to provide good returns in the medium to long term.
