Analysts maintain business case continues as evident from quarterly performance.
Fifteen days is all it took Nikhil Gandhi, co-promoter of Everonn Education and chairman of SKIL Infrastructure, to change the course of India’s second-largest listed education company. The company had fallen off the radar after managing director P Kishore was arrested by CBI on September 5, on charges of bribery and concealing taxable income to the tune of Rs 116 crore.
Given that GEMS is the largest private kindergarten-to-year-12 education operator in the world, the market is viewing this as a positive development. However, what it also means is that P Kishore will not be able to return to the company and “deal with his crisis”, adds Gandhi, Everonn’s chairman. While Kishore holds 8.52 per cent in the company, SKIL holds 21.83 per cent, with other promoter entities holding approximately 12 per cent . As of now, while foreign institutional investors have over 20 per cent in the company, domestic institutions hold close to two per cent.
Depending on how much more stake the Varkey Group is able to pick up from the market, the management change is only one of the by-products of this deal. After the fresh issue, the stakes of existing promoters will also get diluted. From the current 40 per cent, promoters’ holdings may get diluted to 36-37 per cent, some analysts say. As of now, there is no certainty on whether the existing promoters will participate in the open offer, but it is not entirely ruled out.
Analysts maintain the business case for the company continues, as is evident from its quarterly performance. Centrum says the company’s sales grew 45.5 per cent to Rs 98.2 crore against its estimate of Rs 85.2 crore. On a standalone basis too, Everonn reported 50 per cent growth in its top line annually. Clearly, after Varkey’s entry, it could be business as usual.
