Hexaware Deal: Why is Citi reducing outsourcing to the company?

As follow up to my earlier post on "Why Hexaware sale may not happen" (at least not in a hurry) it seems we must add one more reason. Citi which is probably the biggest client of Hexaware is, rumored to be reducing outsourcing to Hexaware creating further nervousness in the minds of the investors/potential buyers.  As a result the stock has been underperforming the market in the last 3-4 days.

However, it would be interesting if the news is true, as it was earlier rumored that Hexaware (or atleast the PE investors) in Hexaware had awarded the sell mandate to Citi. However, later the contract was given to two other MNC investment banks (CS and MS).  Not sure if there is a link between the two, but this could potentially be the reason why there is sudden talk of Citi consolidating spending away from Hexaware.

Cricket loses out to Kabaddi?

The recent cricket matches between India and England and now India -WI have drawn poor response from spectators. While some of this was expected due to the heavy cricket calendar and string of defeats in England immediately preceding, the nearly empty stands have been surprising.  While, I pretend to care less about the results (vs earlier) I still am saddened to see India lose and am egging them on to win from the comfort of my living room. In contrast the IPL drew huge crowds.  This raises important questions for the administrators and players alike

1. Are the glory days of test cricket over, despite continuous cries for the purest format from the players because at the end a sport would survive only if there are spectators? 

2. Is ODI format destined to become irrelevant with Players wanting Test Cricket and Spectators wanting T20's? 

For India, importantly, this may be a chance to try popularize other sports. People are already trying to innovate in hockey to revive the game. Similarly there is brewing interest in other traditional and non-traditional sports. Kabaddi, for example.  It was interesting to witness huge in-stadium crowds for the kabaddi world cup organized in Punjab. While a part of the crowd may have been herded in by the gov't, it was massive.by any standards. Also, it helps, if team India is doing well. India emerged world champs in Kabaddi, on expected lines.

Perhaps, real acid test for cricket in India would be the series down under. India need to do well to stem decline of interest in the game

Everonn close to raising $100 Million from PE?

As reported by BS, Everonn may be close to raising $100 million from private equity players including Carlyle and New York Life capital partners. If true then this would be among the largest PE investments in education sector. At current market price of Rs 298, it has a market cap of about $115 million dollars. However, I would be surprised if Everonn is able to pull it off due to the following reasons

1. Carlyle has burnt its fingers in the past in another Indian education company, which it self has fallen out of favor due to fears on corporate governance. With Everonn's recent problems, including arrest of the former CEO and also deferring of the open offer and poor Q2 results, PE players won't get any where near the company

2. The open offer was to be at Rs 528, almost double the current price. The sharp decline in price would prevent any preferential allotment due to SEBI restrictions on pricing (higher of average of last six months or last two weeks)

Also, NIIT, which is a venerable Indian education training company, is three times the size of Everonn and is available at less than $100 million after adjusting for its 25% stake in NIIT Technologies. And, Educomp, despite concerns on debt is also available at a lower PE of 6.5.

The deferring of the open offer is really worrisome and could see the stock really tanking to lows seen in 2009. 

Everonn Q2 FY12 Results: Revenues slump 26%, PAT in negative territory

Everonn announced its results for the the 2nd quarter (July-Sept 2011)  for FY12.  The effect of the recent turmoil was visible in the results. Revenues dipped 26% YoY to Rs 79.5 Cr from Rs 108 Cr last year. Decline in revenue and  massive increase in depreciation and interest costs pushed Everonn  into a loss with a PAT of negative 3.7 Cr versus 15.5 Cr of profit in the corresponding quarter of FY11.

After Educomp, Everonn is the second education company to disappoint the market this week with poor results. Everonn's share price fell over 5% in today's trade. Educomp's stock has already fallen 25% over the last 3 days.