Aakash Educational Services Ltd Financial Performance Update

Aakash Educational Services Ltd (AESL) has encountered a challenging period in recent years due to leadership changes, restructuring efforts, and the wider repercussions from the financial difficulties of its former parent company, Byju’s. This period of instability resulted in a 16.7% drop in revenue, while losses before tax and exceptional items increased by 4.8 times during this duration.

Aakash’s revenue from operations decreased to Rs 2,032 crore in FY25, down from Rs 2,438 crore in FY24, according to its consolidated financial documents obtained from the Registrar of Companies. Aakash operates primarily through two main revenue streams: coaching and franchisee operations. The coaching segment represented 96% of the overall operating revenue, primarily generated from classroom programmes at its company-owned centres. Revenue from this sector fell by 16.7%, amounting to Rs 1,951 crore in FY25, in comparison to Rs 2,341 crore in FY24.

Similarly, the franchisee model, which includes fee structures and revenue-sharing agreements with partner-run centres under the Aakash brand in various cities, also saw a decline. This segment’s revenue dropped by 15.6% to Rs 81 crore in FY25 from Rs 96 crore in FY24. The company reported an additional Rs 53 crore from other income, bringing the total revenue to Rs 2,085 crore in the last fiscal year.

As Aakash’s scale reduced during the year, the company successfully cut down its overall expenses by 6.1%, bringing them down to Rs 2,378 crore in FY25 from Rs 2,532 crore in FY24. This reduction in costs was mainly driven by lower employee benefits, which dropped by 5.6% to Rs 1,331 crore. The company also decreased its advertising and promotional expenditures by 3.7% to Rs 157 crore, while the cost of materials, predominantly study materials, experienced a notable decline of 25.6% to Rs 67 crore in FY25.

However, the 5.6% reduction in expenses was insufficient to counterbalance the 16.7% decline in revenue, leading to a surge in losses before tax and exceptional items, which rose 4.8 times to Rs 293 crore in FY25. It is worth noting that the net loss figures were substantially affected by deferred tax adjustments in FY25, resulting in a reported net loss of Rs 221 crore. In FY24, the losses were considerably higher at Rs 2,443 crore, primarily due to several extraordinary charges, including a Rs 1,079 crore provision following an NCLT ruling, Rs 100 crore related to the termination of a services agreement with its parent company, and Rs 1,363 crore for interest payments on debentures after a default and early repayment request.

To avoid confusion stemming from these one-off items, which are not directly associated with the company’s core operations, losses before tax and exceptional items have been assessed to provide a more transparent view of its operational performance. By the conclusion of FY25, Aakash spent Rs 1.17 to generate a rupee of operating revenue. Throughout the year, its ROCE and EBITDA margins were recorded at -52.54% and 1.92%, respectively. The total current assets accounted for Rs 341 crore at the end of FY25, including cash and bank balances of Rs 72 crore.

Since FY25, Aakash has witnessed several developments concerning its proposed rights issue. The Supreme Court recently endorsed the NCLAT ruling, allowing the company to move forward with an extraordinary general meeting (EGM) for the rights issue. Reports indicate that the company is on the verge of securing fresh funding, with Ranjan Pai’s family office pledging to invest Rs 250 crore into the coaching chain. It remains uncertain whether these developments will assist in stabilising the company and restoring its growth trajectory in the forthcoming years.