Accumulate Everonn; target of Rs 610: Unicon Investment

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Accumulate Everonn; target of Rs 610: Unicon Investment

Unicon Investment is bullish on Everonn Education and has recommended accumulate rating on the stock with a target of Rs 610 in its August 16, 2011 research report.

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RELATED NEWS Buy Bilcare; target of Rs 831: Sushil Finance Buy Hindalco; target of Rs 193: Sushil Finance Buy Britannia Industries; target of Rs 515: KRChoksey ALSO READ See previous views by Unicon Investment See what other Experts & Brokerages are saying about Everonn Edu See messages about Everonn Edu Everonn Edu BSE | NSE 30/05/12 Are Mutual Funds betting on Everonn Edu?

Unicon Investment is bullish on Everonn Education and has recommended accumulate rating on the stock with a target of Rs 610 in its August 16, 2011 research report.

"Everonn Education Ltd. (Everonn) has reported revenue of INR 982 mn, up 45% (YoY) but down 27% (QoQ). Revenue growth was largely aided by expansion in VITELS which grew 67% on an annual basis. The ICT business also grew 28% YoY. During Q1FY12, the company added 42 new schools and 35 colleges across India. Q1 is a seasonal weak quarter for the company and as a result, the sequential decline in revenue was expected. EBITDA for the quarter stood at INR 366 mn, up 69% (YoY) but down 29% (QoQ)."

"EBITDA margin, at 37.3%, improved by 512 bps on an annual basis. VITELS is a high margin business which currently contributes 43% to total revenue. In the year ago period, this segment contributed 37%. Net Profit in Q1 stood at INR 97 mn, up 39% YoY but down 63% on a QoQ basis. Net margin declined by 49 bps on a YoY basis to 9.9% largely due to an increase in interest expense. The company's Topper Tutorials business grew 36% YoY and contributed INR 45 mn to total revenue for the company. Edu Resource reported revenue of INR 128 mn. Everonn's subsidiaries contributed INR 140 mn to total revenue which includes its recent Skill Development JV with the government."

"Everonn has had several successes over the last four years, especially through its College VSAT business and Classroom software business. We are positive on this company as it has the ability to scale up its business through its high margin VITELS business. Its new subsidiaries like Everonn Skill will also aid to revenue growth going forward. At the current market price, the stock is trading at 11.5 times its FY12 estimated EPS. We maintain our accumulate rating on this stock for a target price of INR 610, implying an upside of 17%," says Unicon Investment research report.

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