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ShareMumbai: Everonn Education is a player in the education and training space. With 7,561 learning centres spread across 26 states, it offers a range of education services. It provides turnkey IT education solutions for government or private schools/ colleges through long-term contracts.
Business: Everonn's scope of services comprises supplying hardware, software and other physical infrastructure for IT education, providing and maintaining good working conditions of infrastructure, imparting computer education in English as well as regional languages, supplying adequate stationery and consumables at centres, providing faculty, creating and building necessary print and multi-media content and training headmasters, teachers, etc on usage of computers and multimedia.
In association with state governments Everonn has set up computer labs at various educational institutions for imparting IT education under its instructional and communication technology (ICT) programme.
It delivers education through virtual and interactive learning classroom networks. Its Virtual & Technology Enabled Learning Solutions (ViTELS) allows overcoming the barriers of distance and delivers an enriched, seamlessly integrated learning experience.
Content is delivered through various platforms -- VSAT enabled live & interactive sessions, server-based content and online. Everonn Educational Resources Solutions Ltd (EduRes) defines its business as being solution provider and technology advisor to educational institutions.
Everonn is investing in a test preparation training subsidiary, Toppers Tutorials Pvt Ltd, for IIT and engineering aspirants.
Investment rationale: The improving education scenario opens new vistas in the Indian education space for private players. The World Bankhas estimated that the annual private market size for K-12 (Kindergarten to class 12) segment at Rs 26,000 crore. The potential is huge as added to this are around 348 universities and over 25,640 colleges and 10.5 million students in the higher education segment.
Everonn is utilising the potential and growing at a robust pace. Its ViTELS business marked a 66.7% growth during the second quarter. In ICT segment also, Everonn added 1,266 schools taking the tally to 5,708. ICT revenues at Rs 13.9 crore grew year-on-year at 6.4%. Revenue from theEducational Resources and Toppers business stood at Rs 24.4 crore, a rise of 168%, and contributed 21% to total revenues.
The ViTELS business has shown a sustained growth over the last few quarters. The addition of both schools and colleges coupled with the introduction of compulsory courses in colleges is likely to continue the momentum.
The ICT segment has accrued a large number of schools to its credit. ICT business involves contracts with the government schools for a longer duration i.e. 3-5 years. This results into higher receivable days of around 140 days.
However, this business segment continues giving sustained revenues over a longer period. Everonn recently got an order from the UP government for implementation of ICT in 1,099 schools. This Rs 91.87 crore order boosts its presence to 5,708 schools under ICT projects and takes the total order-book of this segment to Rs 134 crore, executable over the next five years.
Around 25,000 schools are to come up for bidding in the next 9 months and Everonn will get its share from these, too.
Everonn is taking a new initiative in the name of 'Educating India'. It will act only as facilitator, aggregator and manage the institution without owning any. It will derive 7% of the total project cost and management fees as remuneration.
Concerns: Everonn's business depends on government policies and budget allocations. Any variation in policies or reduced budget allocation can impact the revenues. Any variations in tax structure can impact the bottom line, too.
Valuations: Everonn reported a robust revenue growth of 69.79% during the second quarter. With growth in new business segments, the operating profit rose by handsome 42.6% to Rs 26.32 crore. Net profit growth was robust 80.95% at Rs 11.78 crore. Both operating profit and margins grew 92 basis points (bps) and 99 bps, respectively.
Everonn's ICT segment, after being quiet for some time, has started making a buzz with new orders and there is visibility for more to come. ViTELS is showing a strong momentum, and overall growth from new segments, rich in profit margins, improves revenue visibility. The stock thereby is a good addition to portfolio with attractive valuations.
Disclaimer: The writer does not hold any share in the company.
