Enabled Learning Solutions (ViTELS) initiative is unique and differentiates i군포 토익 t from peers. Setting up learning centres in schools and colleges (325 on last count), Everonn beams its lectures via VSATs. At a 45% Ebitda margin, this is the more attractive segment of its business, but we see ramp ups beginning to trail earlier expectations. The company’s coverage has not changed materially since its 군포 토익 initial public offering in July 2007. We are assuming a 150-centre addition each year going forward. A potential alliance with an international player can help rejuvenate the expansion and add expertise on its course coverage. Growth in new segments a risk to our view Everonn has articulated expansion plans 군포 토익 into school management as well as vocational training. These may create discontinuities in its future growth model, as these segments are not yet included군포 토익 in our estimates. The company manages one school in Cochin, and plans to expand into schools in industrial townships. Expensive valuations given market coverage On current earnings, Everonn is 7% more expensive than Educomp on FY09 earnings, but due to its lower earnings-per-share (EPS) Cagr, it is 36% more expensive on FY10 EPS. While Educomp is also an expensive stock on current fiscal-year multiples, we believe Everonn’s portfolio will need to widen into larger market spaces to justify current valuations and give confidence in multi-year secular growth. Its current portfolio is exposed to both commoditisation and scalability risks. We rate the stock an Underperform. Everonn Systems - U-PF Indian education 74 bhavtosh.vajpayee@clsa.com 14 March 2008 Valuations need further backing IEIS - Institutional education & it infrastructure services Everonn signs three- to five-year agreements with state governments to install and run computer classes in public schools, mostly on a Boot (buildown-operate-transfer) basis. This business is tender-based and Everonn currently operates 3,156 schools in nine states, compared to 6,004 for Educomp and 3,828 for NIIT. ICT contributes 65%
