Everonn

Scam-tainted Everonn Education, a Chennai-based education services provider, has been grabbing headlines for the past month. First its Managing Director P Kishore was arrested  for bribery and tax evasion charges on 30 August, 2011, causing investors to dump its stock instantly. Even the company chairman J J Irani resigned over the scandal. Subsequently, on 2 September 2011, the company appointed  Susha John as the CEO.

Soon after the arrest two major foreign institutional investors offloaded their shares. Morgan Stanley Mauritius Company sold 1,97,602 shares at an average of Rs 244.45 while JF Eastern Smaller Companies Fund offloaded 1,11,953 shares at Rs 250.59 on  7 September.

 Everonn

Screen grab from moneycontrol.com

Broking firm Ambir reiterated its sell stance on Everonn as the company's  cash burn from capex has risen substantially which has begun to meaningfully impact PAT as interest costs almost tripled in the last quarter.

Adding to its woes Credit Suisse downgraded the company to ‘Neutral’. The report argued that while the immediate business continuity might not be a concern, there will be risks to long-term business prospects of the company. Government-related business, which currently accounts for 18-20 percent of the sales, are at risk.

In order to regain investor confidence, the management decided to rejig its  top deck my making SKIL Infrastructure's group chairman and promoter Nikhil Gandhi  the chairman of Everonn. And sure, this news did propel some buying spirit and the stock  gained over the past few trading sessions.

Within days, Everonn's fortunes turned and on 20 September the company announced that it was selling a 12 percent stake to the Dubai-based Varkey group company, Gems Education, for about Rs 138 crore. Buoyed by the news, Everonn’s shares closed 5 percent higher at Rs 367.15.

Gems is the largest private kindergarten-to-year-12 (K12) education operator in the world. In July, 2010 , Everonn had announced that it planned to open 300 K12 schools over the next five years, and Gems’ expertise could come in very handy.

With the Varkey deal, Everonn can finally get back to business.

For the first quarter of financial year 2012, Everonn reported a revenue growth of 45 percent  at Rs98. 2 crore, EBITDA growth of 69 percent  at Rs36.7 crore  (estimates of Rs314m) and PAT growth of 40 percent at Rs9.7 crore

The strong performance was primarily driven by the highest margin VITELS segment garnering a 67 percent revenue growth .

 

 

Updated Date: Sep 21, 2011 10:34:44 IST



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