This post on Everonn Education has a thread that goes back about
2.5 years ago, see below. One of my friends asked my opinion on Everonn
Education when one of Everonn's key management personnel (MD and founder
of Everonn Education) was just arrested by CBI.
The stock was trading around 350+, see below note. However, the stock
bounced back for a brief period sometime in Oct 2011 and reached a high
of 390. I was of the firm opinion to exit this stock and this price movement was god send for the friend. Later this stock, read the darling of once upon a time of the market punters, could never see those levels. Today that friend reminded me of Everonn Education and asked me to check the price. Its today's price is Rs34 which is a loss of about 91% of the capital from Rs390 levels. I am sure if it will never see those levels again in its lifetime. It will be worth reading below communication and if you have any opinion, please do share.
Cheers,
Niteen S Dharmawat
On Fri, Sep 2, 2011
Niteen S Dharmawat wrote:
Niteen S Dharmawat
On Fri, Sep 2, 2011
Niteen S Dharmawat wrote:
How one could have avoided Everonn EducationEveronn Education which came
in news because CBI had arrested the founder and managing director of
Everonn Education Ltd., P. Kishore, on charges of bribing an Income Tax
official with Rs 50 lakh.
This
will adversely affect the stock price of Everonn Education. Everonn
Education had been a darling of stock punters for last several
months/years due to various reasons including flamboyant business model,
appointment of prominent personality like Dr. J. J. Irani on the board
of the company, selling stakes to prominent shareholders like Sea King
Infrastructure's (SKIL) Mr. Nikhil Gandhi and investment by some
prominent non-promoters (part of public shareholding) in the company
include Morgan Stanley Mauritius Company (4.32%), BNP Paribas
Arbitrage (1.31%), Citigroup Global Markets Mauritius (1.30%), Reeshanar
Investments Ltd (2.96%), JF Eastern Smaller Companies Fund (2.05%),
India Fund Inc2.28%), Indea Capital Pte Ltd A/c Indea Long
Termopportunities Master Fund(2.08%), Amundi Funds India(1.82%) and New
Vernon India Ltd (5.69%).
Could
we as an investor save ourselves from investing in a company like
Everonn Education? Yes, certainly. If someone had just followed the
parameters described in my investor education presentation, s/he would
have never invested in this company. One of the reasons which would have
given a red signal is ‘Skin in the game: Promoters buying or selling’.
If
you see the Shareholding Pattern (SHP) of Everonn then you will find
that main promoters are holding 42.67% of shares. This 42.67% includes
the diluted stakes by selling 40 lac shares (which is equivalent to
20.83% of total shares of Everonn) to SKIL Infrastructure. If you see
the SHP reported in June 2011 (same in March’11) this entire stake of 40
lac shares is pledged by SKIL Infrastructure. In other words, the skin
in the game of promoters is reduced to 21.84%. Out of this 21.84%, the
main promoters have also pledged 8,13,989 shares. If we remove this also
then the promoters holding comes down to 17.6%. One would not have
invested in Everonn Education because:
- Promoters have pledged significant stake and thereby reducing their stakes in the game significantly
- The main promoters have less 20% stakes remaining with them (don't smell a similar to Satyam? we forget so fast.)
- Never get tempted in the company just because of big names are part of the venture instead a due-diligence would have helped.
Trust this is of help. Please share your views.
Happy investing,
Note:
the views expressed here are in all respect my personal and may go
completely wrong. This is for private circulation and has been sent only
to limited people to get their views. You are requested and advised to
do your due-diligence and take the advice of a qualified financial
advisor before taking any financial decisions.