His company Educomp set out to prove that there was money in school education. But in the last five years, he's burnt his fingers badly
Ankur Rudra, a stock analyst at Ambit Capital, knows how to call it like it is. In January 2011, the then 29-year-old stuck his neck out by putting a ‘sell’ rating on Infosys, a company that had been the blue-eyed baby of the Indian stock market for nearly two decades.
It would take nearly a year-and-a-half for the rest of the analyst and investor community to come round to Rudra’s point of view, that Infosys was being valued too highly in the context of its growth potential. Of course, by then its stock had shed nearly a third of its value, so everyone had the benefit of hindsight as well.
In February last year, Rudra stopped tracking Educomp Solutions, the largest education services firm in the country. “I’d been pessimistic about the company since 2009, but by 2012 there just wasn’t enough trading in the stock for it to be of commercial interest to any stock broking firm,” says Rudra.
Sangeeta Gulati too had been bearish on the stock. Of the 35 transactions she undertook in Educomp between 2007 and 2012, nearly two-thirds were sales, and in almost all cases undertaken within a fortnight of acquiring the shares.
By May 2011, Educomp had delivered all the hardware to Sanskaar, ready to be installed and configured.
“That was the beginning of the downfall of their stock. When Educomp saw growth slowing down because they’d penetrated most premium ICSE and CBSE schools, a better way would have been to educate the market and make itself more sustainable instead of changing their accounting model by using a private company to book revenue upfront,” says Rudra.
(This story appears in the 19 April, 2013 issue of Forbes India. To visit our Archives, click here.)