>EVERONN EDUCATION: Q4FY10 Update (CENTRUM)

Everonn Education’s (Everonn) Q4 results were much higher than expectations with sales surging 192% YoY to Rs1,045mn (vs our estimate of Rs845mn). We reiterate our Buy with a target price of Rs540 considering the consistent growth momentum in VITELS and attractive valuations. We believe the company’s ‘Educating India’ initiative and improvement in revenue per points of presence in the VITELS segment would be upside triggers.

■ Results beat estimates: Q4 sales surged 192% YoY to Rs1,045mn vs our estimate of Rs845mn. This strong growth was mainly driven by the VITELS and Edu Resource (hardware sales) segments. EBITDA margin expanded 207bp to 30.6% due to higher contribution
of VITELS (49% of overall revenue).

■ Strong VITELS revenue growth as points of presence increase: The VITELS segment, which grew 184% to Rs508mn, was one of the main contributors to the growth in net sales. The company added 150 schools and 171 colleges during Q4.

■ Valuations attractive; reiterate Buy: At CMP, the stock trades at 10x FY11E and 8x FY12E earnings, we believe is very attractive considering improvement in financial performance. We reiterate Buy valuing the stock at 11.5x FY12E earnings, translating into a target
price of Rs540.

To read the full report: EVERONN EDUCATION