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Everest Kanto Cylinders -Robust growth in international sales…
Everest Kanto’s Q3FY11 performance was better than our expectations
with the sales growing by ~17% (YoY) to |.197.4 crore against our
expectation of ~8% growth only. Higher growth was led by robust
sales in the international business that grew by ~65% (YoY) during the
quarter. Also, margins improved significantly by 600 bps to 19.1% in
Q3FY11 from 13.1% in Q3FY10. Improvement in EBITDA margins
coupled with lower interest cost and depreciation provisioning led to
the higher earnings of | 23 crore in Q3FY11 against |1.4 crore in
Q3FY10.
ƒ Highlight of the Quarter
The company has expanded its production capacity (Bullet piercing
plant) by ~4,00,000 cylinders per annum (current capacity is
10,11,000 cylinders per year) by setting up manufacturing units in
Kandla and Kandiram (Gujarat). It plans to commence operations
from these units from Q1FY12 and cater to both domestic and
international markets.
Valuation
At the CMP of |81, the stock is trading at 11.7x and 8.6x its FY11 and
FY12 estimated EPS of |6.9 and |9.4, respectively. With the revival in the
demand from Dubai and China, the company has exhibited two
consistent quarter of growth in sales. We believe high CNG cylinder
demand to result in robust revenue growth from India, Dubai and China
going forward. Simultaneously, high crude prices inching at ~$90/barrel
would also to aid demand for CNG cylinders. However, due to recent
macro headwinds and volatility in the markets, the stock witnessed a
sharp correction. We thereby revise our price target to |94 by valuing it at
10x its FY12E EPS of |9.4 and maintain BUY rating on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Everest Kanto Cylinders -Robust growth in international sales…
Everest Kanto’s Q3FY11 performance was better than our expectations
with the sales growing by ~17% (YoY) to |.197.4 crore against our
expectation of ~8% growth only. Higher growth was led by robust
sales in the international business that grew by ~65% (YoY) during the
quarter. Also, margins improved significantly by 600 bps to 19.1% in
Q3FY11 from 13.1% in Q3FY10. Improvement in EBITDA margins
coupled with lower interest cost and depreciation provisioning led to
the higher earnings of | 23 crore in Q3FY11 against |1.4 crore in
Q3FY10.
ƒ Highlight of the Quarter
The company has expanded its production capacity (Bullet piercing
plant) by ~4,00,000 cylinders per annum (current capacity is
10,11,000 cylinders per year) by setting up manufacturing units in
Kandla and Kandiram (Gujarat). It plans to commence operations
from these units from Q1FY12 and cater to both domestic and
international markets.
Valuation
At the CMP of |81, the stock is trading at 11.7x and 8.6x its FY11 and
FY12 estimated EPS of |6.9 and |9.4, respectively. With the revival in the
demand from Dubai and China, the company has exhibited two
consistent quarter of growth in sales. We believe high CNG cylinder
demand to result in robust revenue growth from India, Dubai and China
going forward. Simultaneously, high crude prices inching at ~$90/barrel
would also to aid demand for CNG cylinders. However, due to recent
macro headwinds and volatility in the markets, the stock witnessed a
sharp correction. We thereby revise our price target to |94 by valuing it at
10x its FY12E EPS of |9.4 and maintain BUY rating on the stock.
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