Everonn Education Dec 2011 Quarter Earnings’ Review
DSIJ Intelligence / 17 Feb 2012
Everonn Education announced its results for the quarter ended December 2011 on February 14, 2012. The results were not very encouraging. The net sales of the company on a consolidated basis have declined by 15 per cent on a YoY basis to Rs 92 crore while the operating profit of the company has declined by 58 per cent on a YoY basis to Rs 16 crore.
Everonn Education announced its results for the quarter ended December 2011 on February 14, 2012. The results were not very encouraging. The net sales of the company on a consolidated basis have declined by 15 per cent on a YoY basis to Rs 92 crore while the operating profit of the company has declined by 58 per cent on a YoY basis to Rs 16 crore. The operating margin of the company has come down by 1,700 bps to 17.27 per cent.
The bottomline has taken a major hit during the quarter with a loss of Rs 10.48 crore as compared to the profit of Rs 15 crore in the same period last year. The decline in profit was mainly on account of the high depreciation and high Interest charges which have gone up by 82 and 145 per cent respectively.
Particulars | Dec’11 | Dec’10 | YoY | Sep’11 | QoQ |
|---|---|---|---|---|---|
Sales | 92.1 | 108.1 | -14.8 | 79.6 | 15.8 |
Operating Profit | 15.9 | 38.0 | -58.1 | 24.2 | -34.0 |
Interest | 14.0 | 5.7 | 145.4 | 11.5 | 22.2 |
Depreciation | 17.1 | 9.4 | 82.9 | 18.3 | -6.4 |
Net Profit / Loss | -10.5 | 15.6 | -167.2 | -3.8 | 178.0 |
OPM (%) | 17.3 | 35.2 | -17.9 | 30.3 | -13.1 |
GPM (%) | 2.1 | 29.9 | -27.8 | 16.0 | -13.9 |
NPM (%) | -11.4 | 14.4 | -25.8 | -4.7 | -6.6 |
The stock has been in news for quite some time after the incident of the chairman P Kishore’s arrest in the alleged case of bribery on August 31, 2011 after which the stock price of the company came down drastically. It has been down by 27 per cent since that date. Also, the incident put the FIIs in the exit mode. The FIIs’ stake in Everonn has come down to 0.49 per cent in the quarter ended December from 27.75 per cent in June 2011. We believe that the FIIs have used the open offer route offered by Dubai-based Varkey Group to exit the company.
Everonn Education, formerly known as Everonn Systems, is a Chennai-based provider of technology-based education services to schools and skill training to vocational institutes and colleges, which entered the education sector in 1999. The company has performed robustly over the past three years. On a consolidated basis, the sales have grown at a CAGR of 66 per cent with the aid of its core business ‘VITElS’ which has contributed significantly to the overall revenues and profitability.
At its CMP the scrip is available at a PE of 23.61. And with its EPS of Rs 13.85 the scrip looks overvalued given concerns such as decline in sales, losses from the last two quarters and corporate governance issues after the chairman’s arrest. The company in the last two quarters has consecutively reported weak numbers which we believe will continue in the coming quarter as well. Also, FIIs getting out of the company raises eyebrows over its business sustainability. Therefore we recommend our investors to stay away from the scrip.
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