Everest Kanto Cylinder LtdQ2 FY24
Everest Kanto Cylinder Ltd Q2 FY24 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Price: ₹123P/E: 10.9Market Cap: ₹1.3K CrSector: Industrial Manufacturing
Management growth scorecard
Revenue
Category 3
Margin
Category 2
Fundraise
No
Order
Yes
Capex
Yes
2 of 5 growth signals are positive.
Full analysisRevenue guidance
Category 3- →Revenue growth expected at least 15% to 20% for the full year FY25 (Puneet Khurana, Page 4).
- →Volume growth in standalone Indian business around 20% (Page 5).
- →CNG segment showing better than average growth (Page 5).
- →Commercial segment business is starting to pick up, with positive developments anticipated in passenger vehicles and new two-wheeler vertical (Page 5).
- →Expansion plans underway with new manufacturing facilities in Egypt and Mundra, India, adding 4 lakh capacity by FY25 end to meet future demand (Page 3 and 8).
- →Utilization currently at about 70%; spare capacity of around 30% available to meet incremental demand (Page 7).
- →Long-term bullish view on CNG industry, with growth expected despite price challenges, supported by expanding CNG stations and government incentives (Pages 2-5).
Margin guidance
Category 2- →The company expects revenue growth of at least 15% to 20% for FY25.
- →EBITDA margins are anticipated to improve from current levels, with a target of around 13%-14%.
- →Operating margins are expected to recover as the commercial business segment picks up.
- →Profit after Tax (PAT) showed strong growth in Q1 FY25, indicating positive earnings momentum.
- →Management remains cautiously optimistic and prefers a conservative outlook despite positive trends.
- →Future expansions in Egypt and Mundra (total 400,000 capacity addition) by FY25 end aim to support long-term growth.
- →The CNG segment and new opportunities like the two-wheeler CNG vehicle launch are expected to contribute to improved earnings.
- →Overall, the company aims to leverage robust order books and industry tailwinds for sustained profit growth.
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Fundraise plans
No- →No explicit mention of new fundraising through debt or equity in the current transcript.
- →Puneet Khurana confirmed the company will be completely debt free after completing ongoing CAPEX.
- →Existing CAPEX in Egypt (Rs. 150 crore) and Mundra (Rs. 100 crore) are being funded without additional debt mention.
- →The company currently holds a strong cash position (approx Rs. 50 crore standalone) and is managing working capital efficiently.
- →Management plans to first increase utilization of existing assets before deciding on future investments or capacity expansions.
- →Any future decisions on capacity build-up will depend on market conditions and will require detailed feasibility studies.
- →No indication of equity fundraising or new debt planned in the near term as per available information.
Order book
Yes- →The US business has a strong order book with good orders from reputable customers like SpaceX, NASA, and the US Navy.
- →Execution depends on project timelines; delays from customers (e.g., Navy, NASA) can affect delivery schedules.
- →Last six months saw Rs. 170 crore in execution and delivery from the US business.
- →Q4 figure of Rs. 80 crore can be considered a benchmark for the US business's performance.
- →Despite a strong order book, the project-based nature leads to variability in quarterly deliveries.
- →No specific total order book value disclosed, but overall visibility is good with strong project clients.
Capex plans
Yes- →Current CAPEX projects include two major greenfield facilities in Egypt and Mundra, India.
- →Egypt facility CAPEX is Rs. 150 crore, with Rs. 40 crore already spent, expected to be operational by June 2025, capacity of 200,000 cylinders per annum.
- →Mundra facility CAPEX is Rs. 100 crore, with Rs. 50 crore already spent, expected completion by March 2025, capacity of 200,000 cylinders per annum.
- →Total incremental capacity after these projects will be 400,000 cylinders per annum.
- →Expansion focused on seamless high-pressure CNG and industrial gas cylinders; Mundra will also produce composite cylinders.
- →Further capacity expansions will require careful study of viability and timelines; new expansions would need new facilities.
- →Management plans to increase utilization before deciding on additional capital investments.
- →Strategic focus on strengthening manufacturing capabilities to meet growing demand in CNG and hydrogen markets.
How does Everest Kanto Cylinder Ltd rank vs peers in Industrial Manufacturing?
Pro feature1Everest Kanto Cylinder Ltd
Rev 3Mar 2
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