Dear Alchemist,

This stock is running for the last few sessions.

Can you please comment on this for buying on long-term basis.

Regards.

Everonn is surely a good long term bet.

However, the current price of Rs 727 seems a bit stretched.

A few days back, Everonn's management had stated in an interview to CNBC that the company should have Rs 81 crore turnover and Rs 11 crore profit in FY 2008.

The company has around 1.385 crore shares outstanding.

Rs 11 crore of profit will mean Rs 7.95 eps.

At Rs 727, the stock is trading at 92 times FY 2008 earnings.

FY 2008 is almost over now.....4 months to go. In next 2-3 months, people will start looking at FY 2009 earnings.

It is difficult to predict forward earnings of such small companies.

If we assume 50% profit growth for FY 2009, the eps would come around Rs 12.

As the company is expected to show strong growth in next few years, it is unlikely that the stock will be available for less than 40 times in the next few months.

It would be a good buy for the long term...if it is available around Rs 560 or so.

You can also look at other bigger players in the same sector like Educomp and NIIT.

Educomp is similar case like Everonn... is pretty expensive compared to its earnings.

NIIT is much cheaper compared to Everonn. (I have not looked at the fundamentals of NIIT...just comparing on earnings).

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Dear Alchemist,
Thanks for the valuable advise.

All,

what do you think of this company ? Will it be a multibagger? based on the last quarter results, I think this is going to be multibagger at this rate. Def it will go up to 400 in 2 years. comments plz.

Everonn Systems looks like a good pick at current prices.

The stock has come back to its IPO price of Rs 140.

I have been holding the stock for some time now. I bought it at 200+ levels.

Everonn Systems is poor man's Educomp.

Both companies have similar business model, but currently Educomp is showing better growth.

Still Everonn's valuations appear better to me.

Everonn System is trading at something like 8 times last 4 quarter's earnings and Educomp is trading at 27 times last 4 quarter's earnings.

I am surprised that the stock has fallen back to its IPO price. I hope there are no corporate governance issues with this company.

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Sorry for my ignorance.

Could you pl explain bit about the following sentence?

"8 times last 4 quarter's earnings and Educomp is trading at 27 times last 4 quarter's earnings? "

It means Everonn's stock price is trading at 8 times the net profit (per share) that it made in last 4 quarters (last 12 months).

You can also put it this way....

Everonn's market value (market capitalization) is 8 times the net profit that the company has made in last 4 quarters.

In fact at current price, the stock price is 6.7 times the earnings of last 4 quarters.

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there is something seriously wrong



- This is going to be a strong resistance for this share for long long time.
- check the volume at breakout.

Its down almost 10% to 95,

I can think of only two reasons why this stock is at 95.

1. The management is total fraud and this is another Satyam in the making. All accounts are cooked-up.

(There is no information/evidence in the public domain which suggests any kind or fraud or manipulation).

2. Some FII/foreign investor has got serious liquidity problems and is dumping his holdings in India.

As on 31st December 2008, the total foreign holding in Everonn Systems was around 39.6%.

FII - 20.5%.
Foreign Venture Capital Investors - 5.6%
NRI's - 2.5%.
Foreign Individual Investors - 11.0%.

Source - Everonn Systems' shareholding pattern available at NSE for Q3.

Very few stocks have such high foreign ownership.

================================

This stock won't stay at current prices for long.

If 1. is true, then the stock will go to 0.

If 2. is true, then the stock will rebound very sharply in days to come.....at least till 150.

================================

I bought a few shares today at Rs 95 at closing.

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According to NSE's "Bulk Deals" report, Norges Bank sold 80000 shares of Everonn Systems at Rs 85 yesterday.

Yesterday's total delivery volume was 174177.

This is the problem with many smaller stocks today.

FII's want to exit, but there are no buyers in the market for smaller stocks.

Any above-average selling leads to a price crash.

(Norges Bank is Norway's Central Bank).

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Alchemist, in the past, FII's used to restrict themselves to large-cap, "blue-chip" stocks. But, in the course of the 2003-2008 bull run, they seem to have become very adventurous. If you remember, the type of stocks that showed up during the Bear Stearns sell-off surprised a lot of people.

Presumably, there's a lot more selling left in mid- to small-cap stocks if one assumes that FII's first sold stocks in which they could book profits.

I don't think FII's think that way.

Only retail investors refuse to sell at a loss.....

In many cases. FII's dump those stocks first where there is liquidity to absorb the selling without significant price erosion.

========================

Many small-cap and mic-cap stocks are over-owned by FII's.

e.g. Consider a stock that has 30% FII ownership held between 10 major FII's.

Now, even if one FII decides to sell the stock, the price will crash. The reason is that there are no buyers in the market and it is not possible to sell 3% equity in smaller stocks without significant price damage.

For large-cap stocks, there are still buyers and it is possible to arrange "bulk deals"

Indian mutual funds, insurance companies etc are still buying, but theh are not interested in smaller stocks.

When TCI Cyprus Holding sold 2.25 crore shares of IOB, LIC picked up 1.5 crore shares. It was an "arranged deal".

Such deals are very difficult in smaller stocks.

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Norges Bank sold another 88170 shares today.

Fortunately, there was someone buying too and thus, the stock ended 5% up.

At the end of last quarter, Norges owned 253227 shares.

Thus, it won't be having much more than 90000 shares now.

It is possible that these 90000 shares may have been already sold or may get sold soon.

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Is it good to enter in this script now for a bounce back on Monday?

There is no history to see next support so i am reluctant to enter...

Then I have Pyramid Saimira still bleeding on my profile......I look at it and laugh at it... What a mistake and what experts we are....there r smarter guys out there!

If history not available then how new is this company and what book balance sheet says?

You did not get out of Pyramid at the time of circuit levels? Well I through it at 41+ with a bit loss.

Happy investing!

Everonn Systems had come out with its IPO in mid-2007 and thus, the stock doesn't have much of a trading history.

The company has a business model that is similar to Educomp, but with certain differences.

The revenues/profits are growing pretty fast, but compared to Educomp, Everonn is lagging.

The company doesn't have much debt and the balance-sheet isn't a reason to worry.

but then Satyam's balance sheet also wasn't a reason to worry before Raju's confession....

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did you go long in this stock...?

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NO!


But somebody seeing the volume and inverted hammer if gone long with a stop-loss must be laughing to bank 46% bounce boss!

SATYAM style ho gayya!

some big player must have picked up a lot of shares.

we will know by tonight.....it should show up in the "bulk deals" reports.

the volume was nearly 10 times Friday's volume.

volume on NSE was 83 lac shares.

even if 5% of that is marked for delivery, it would mean 4+ lac shares.

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Pathetic delivery volumes.....only 2.96 lac shares delivered on NSE.

No big buyer bought this stock....most of the shares that were bought today, were squared-off.

I hope Everonn doesn't go the way that Hexaware and WWIL went.....giving up all gains in few days after a big move.

1. Hexaware Chart.

2. WWIL Chart.

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Some interesting figures for Everonn Systems:

Total number of shares outstanding: 151.2 lac shares.

Number of shares held by promoters/directors: 42.9 lac shares.

Public shareholding: 108.3 lac shares.

(Both above figures are figures at the end of 2008).

============================

Yesterday's volume of NSE: 82.7 lac shares.
Yesterday's volume of BSE: 40.2 lac shares.
Total volumes for yesterday:112 .9 lac shares.

The total volume was more than the public shareholding...

In the current pace of trading is maintained, today's volume may exceed yesterday's volumes.

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can we enter at this price then?

as a trader?

I would say no.

the stock is highly overbought and may come down too.

as an investor?

I would say yes.

even after this massive jump to 145, the stock is trading at 6-7 times forward earnings.

disclaimer: I have bought this stock at various levels between 270 and 95.

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At 1:40 PM,

NSE volumes: 108 lac.
BSE volumes: 51 lac.

(NSE + BSE) volume has exceeded the total number of shares outstanding....

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For those who are holding Everonn, there is a good Arbitrage opportunity (in multiple of F&O lot):


One can sell it in Cash @ 154 & Buy Future @ 150 (March) / @ 147 (April)

At the expiry, Cover both Postitions, with a Risk-less profit of around 4-7 Rs per share.

Alchem!

I am thinking to enter in this counter as an investor..

Lets say market crashes near election or post election time.

You think it can hit below 100 again?

Or should I invest small about at this price level?

If we look at yesterday's big gap of lows and highs .. seems like uncertainty of both sides.

Any suggestion!


Happy and safe Investing!

Yesterday, one of Everonn's oldest investors...NetEquity Ventures sold 1.36 lac shares and 1.14 lac shares on NSE and BSE respectively.

NetEquity has been an investor in Everonn Systems since 2000....much before the 2007 IPO.

At the time of IPO, NetEquity held more than 20 lac shares in Everonn Systems.

NetEquity has now sold most of its shares and is nearly out of the company.

(Current holding must be around 50000 shares).

However, one shouldn't be surprised.....that is how venture capitalists function....they invest in new ventures and then sell-out when the high growth phase is over.

Interestingly, these 2.5 lac shares were absorbed by the market without any price damage.

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I think 100 will be difficult in the short-term unless some other big investor comes and starts selling.

You may get 125-135.

Yesterday, the stock was range-bound and spent most of the time between 150 and 160.

The opening on NSE was a stray trade.

See the BSE chart.

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It's correcting significantly. Is it better to enter now or wait for some more time for to correct fully???

My time frame is for 3 years minimum.

Senior members please advise.

Can somebody give me a chart for Everonn Systems?

Preferably with 50 EMA, 200 EMA and any applicable retracements levels.

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The 50 EMA and 200 EMA can be seen in Moneycontrol. I don't know about the retracement levels.

http://www.moneycontrol.com/india/st...education/EE05

By the way, I don't know much about this!

See the retrachment levels here:

Hi Ashish,

Please could you explain the 100% value?

I understand the 0%: presumably, it is the lowest intraday price ever reached.

But then the 100% value should be higher (reached sometime around Sep 1, 2008) than what is shown in your chart.

Again, I want to make clear I don't know anything about this so I hope you don't mind the question.

How come Ragav's and ashish's charts have totally uncorrelated DMA plots???

One is log the other not-log .

Moving calculations are not affected by the scale used.

One is using simple moving average and other is using EMA.

EMA is more sensitive to current price than SMA (simple moving average).

Hence the difference.

See the upper-left corners of both charts.

The levels are inverted.

Anyway, it doesn't make much of a difference.

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Bought 15 shares of Everonn Systems at 345.50.

I will add more later.

I intend to hold as it as an investment.

(I will buy more around the 38.2% retracement level, which is shown as 61.8% retracement level in the chart in post #34).

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Sorry, here is the correct chart:



To find retrachment levels as per Fibonacci Retracement:

We put 100% at start point of the rally and 0% at end point of the rally.

As per this theory 23.6%, 38.2%, 50%, 61.8% and 78.6% levels are crucial resistances.

For uptrend rally: You need to put 100% at lowest level and 0% at highest level, while it is vice-versa for downtrend rally.