Everonn, the market leader of ICT in education, has posted a 72% CAGR growth in its topline over the past five years. The government's proposal to increase spending on vocational training across the country and the company's new initiatives to expand its market presence are likely to keep the growth momentum strong. Also, it has reported a consistent improvement in its operating margin. However, uncertain cash flows from its new subsidiaries and fragmented nature of the industry continue to be a concern. Everonn continues to report a decent financial growth over the quarters. During the 12 months ended December 2010, the company's revenue and net profit grew by over 75% each. But its operating margin dropped by 100 basis points (bps) due to the fluctuating operating costs. However, profitability is once again improving. During the December 2010 quarter, operating margin expanded by 300 bps sequentially to 38.1%. The company has invested nearly Rs 40 crore towards its two new subsidiaries funded through internal accruals. During the December 2010 quarter, while the existing subsidiaries reported a decent growth in revenues, the new subsidiaries reported a 76% drop in its EBIDTA. However, the businesses are likely to break even in coming quarters. At the current market price of Rs 568.9, the stock trades at 18.7 times its earnings for the trailing 12 months. The company's future growth looks promising, given its initiatives and the government's thrust on mass education.
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