Subscribe to Everonn IPO: Networth

MUMBAI- Networth Stock Broking recommends subscribing to the initial public offering of Everonn System India Ltd. The issue, priced between Rs 125 and Rs 140 per share, opens Thursday via 100 per cent book building process. The issue closes on Wednesday.
“At the higher end of the price band, the stock is priced at 40 times its 2006-07 (April-March) diluted earnings per share of Rs 3.51 and 35.6 times at lower band. According to our analysis, going forward there will be massive improvements in the revenues and profitability margins. This will justify the valuations on a forward basis,” said Networth’s research report.

Everonn System India offers a fully integrated knowledge management, education and training package. It is one of the leading players in setting up virtual and interactive learning classroom networks across India. The company also develops and integrates content for Indian and global schools, colleges, along with the corporate and retail space.

The Chennai-based company caters to government schools to private schools in the ratio of 70:30. Therefore, long payment period suppresses immediate recovery and prolong debtor days.

The report reckons that Everonn System India is moving towards more profitable private schools where it may command an EBITDA margin of 25 per cent and above.

The company plans to use the proceeds of the offer to fund its expansion schemes. Part of funds would be utilised towards brand building, proposed mergers and acquisitions and invest in the proposed subsidiary.

A leading fund management company, India China Pre IPO Equity (Mauritius) Ltd, had invested Rs 14.06 crore in the company at Rs 106 per share in July 2006.