RIL’s edtech business is valued at $3.5 bn, as it is yet to announce its entire bouquet of services
The company has revamped e-education app Embibe which is live now
Mumbai: Reliance Industries Ltd (RIL), though a late entrant into the edtech space, could still corner a 10% market share by 2025 with a valuation of $7-8 billion, say analysts.
"In our view, paid users can grow 3x to 30 mn by CY25E, and if RIL captures ~10% share, then its EdTech could be worth US$7-8 bn at multiples of last funding round of peers," said Credit Suisse in its report dated 22 June.
Currently, RIL’s edtech business is valued at $3.5 billion, as it is yet to announce its entire bouquet of services.
Mint had on 14 June reported that RIL is building a suite of e-learning and offline solutions for its education arm through its platforms-- Embibe, Extramarks Education, and Jio Institute-- to take on rivals Amazon, Byju's and Vedantu, among others.
The company has revamped e-education app Embibe which is live now.
According to the report, the edtech market is still in early stages, with penetration of less than 5% (paid users less than 10 million). High pricing is constraining penetration and more competition should expand the user base.
RIL has significantly revamped both quality and quantity of the content in Embibe app (spent ₹5 billion in FY21), creating a vast library of engaging high-definition original content in mathematics and science, addressing students of Classes VI-XII across all central and state boards, test preparation for competitive exams and government jobs.
RIL is also entering higher education through Jio Institute (already spent ₹16.71 billion).
Though RIL has also built its edtech presence through acquisitions of companies with initial content (Embibe, Funtoot, Designmate, and OnlineTyari) and subsequently scaling up the content its peers, Byju's and Unacademy have been more acquisitive to become full-service platform provider in terms of capabilities, increasing penetration in the B2B market (schools), and targeting offline students (online-offline integration) and export markets.
While Byju’s has already spent nearly $1.4 billion since January 2019 on acquisitions, Unacademy has done eight acquisitions in the past 18 months.
"E-education business model has high operating leverage. Our analysis of Byju’s financials suggests that gross margin is high in EdTech (>80%), but fixed cost is high too (employee cost: >30% of revenue, and advertisement: >35% of revenues). Therefore, scale of operations is key to success," the report added.
While Byju’s is ebitda-positive, with good conversion rate of paid users to registered users, at 7%, its peers, are low at 1% (Unacademy was Ebitda negative in FY20 with expenses to income ratio of 6x).
The online education market in India has been witnessing a strong adoption driven by increasing smartphone penetration, a rise in awareness about e-learning, ease of learning, flexibility in schedules, and availability of a wide range of study materials.
The trends have accelerated post the covid-19 outbreak, as a large section of the student population resorted to online learning for the sake of continuing their in-classroom sessions.
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