Views on Life & on Equity Investing

Wonder, Wealth & Abundance

Everonn Multibagger | Followup

leave a comment »

Education sector is due for transformation. Govt. funding to support this endeavour is and will increase un abated year in and out. To give a sense of numbers, there are 10 Lac Govt schools in India and 75,000 private schools. At the moment Educomp is leading in private schools with SmartClass which has been replicated by Everonn with iSchool and trailing on the heels of Educomp.

Now comes an interesting revelation, 75%+ of those 10 lac schools have less than three teachers, which implies Educomp does not have interest, inclination and model to support those as yet. As a matter of fact, it does not have interest either, its interested in establishing a private chain of schools, five flavours already exist today – that in itself will be a mega market.

Coming back to figures, there are only 25,000 Govt. schools having ICT , multimedia, private participation in them. Everonn is present in 25% of them, i.e. roughly 6,000. Govt will open up 650,000 , thats right 6.5 lac schools to ICT bidding over next 5-6 years, if Everon maintains same share, I will leave the mathematics to you, to guess EPS.

After five years of contract, a majority of schools will re contract for new training material, courseware. Thus its a perpetual model and not limited to five year annuity.

Market has become pessimistic with Educomp, Everonn and education sector prematurely. Its like 2005 and Bharti Airtel is a strong buy despite 5 crore connections.

I feel that Everonn will reward better than any other stock I have mentioned. Relaxo could do equally well. The mania saw it scale over 1200 and manic depressant behavior of Mr. Market tanked it to 90 Rs, today it is available at roughly 400 Rs. I feel the fair price of Everonn is 2000 Rs given the enormous scale of opportunity and speed of scalability possible.

I expect it to grow 40%+ EPS for next five year. Depending on craze and madness in bull run PE can strech anywhere between 20 and 80 as investors fancy this in hindsight. It is due for a major PE re rating.

Have a profitable investment.

Written by amitdipsite

May 16, 2010 at 4:59 am

Posted in Uncategorized

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: