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D i s a p p o i n t i n g p e r f o r m a n c e …
Everest Kanto Cylinders (EKC) reported a subdued set of numbers in its
Q2FY12 results. The company’s topline witnessed de-growth of 16.3%
YoY from | 226.6 crore in Q2FY11 to | 170.4 crore in Q2FY12. Margins
dipped significantly from 20.5% in Q2FY11 to 4.4% during the quarter.
The sharp decline was on the back of a foreign exchange loss of | 23.4
crore reported by the company. Margins were also hit due to a higher
employee cost (12.3% in Q2FY12 against 9.2% in Q2FY11) and other
operating expenses (22.6% in Q2FY12 compared to 19.1% in Q2FY11).
Hence, a slowdown in sales and considerable strike on the margins led
the bottomline to report a loss of | 2.9 crore.
ƒ Highlights of the quarter
EKC’s overall volume sales have witnessed a decline of 7.3% YoY during
the quarter, with the sales of both CNG and industrial cylinders falling by
8.4% YoY and 6.3% YoY, respectively. Though jumbo cylinder sales have
increased by ~2.5x their composition in the overall sales itself, it is very
low (~0.4% of total sales volume in Q2FY12). We believe realisations
have also been lower by ~8% YoY in Q2FY12, thereby pulling down the
topline by ~16%.
ƒ Geographical sales performance
During the quarter, EKC’s sales in India and Dubai witnessed a significant
fall of ~29% (| 83 crore in Q2FY12 from | 116.9 crore in Q2FY11) and
~26% (| 53.3 crore in Q2FY12 vs. | 71.9 crore in Q2FY11), respectively.
Sales in China and the US remained strong and grew handsomely by
~86% and ~117% to | 22.7 crore and | 36.2 crore, respectively.
V a l u a t i o n
At the CMP, the stock is trading at 8.2x and 7.5x its FY12E and FY13E EPS
of | 6.7 and | 7.3, respectively. With a slowdown in Indian operations and
increasing cost pressures for the company, we remain cautious on the
company’s performance in the coming quarters. Hence, we have valued
the stock at 8x its FY13E EPS of | 7.3, assigning it a target price of | 58
with a HOLD rating.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
D i s a p p o i n t i n g p e r f o r m a n c e …
Everest Kanto Cylinders (EKC) reported a subdued set of numbers in its
Q2FY12 results. The company’s topline witnessed de-growth of 16.3%
YoY from | 226.6 crore in Q2FY11 to | 170.4 crore in Q2FY12. Margins
dipped significantly from 20.5% in Q2FY11 to 4.4% during the quarter.
The sharp decline was on the back of a foreign exchange loss of | 23.4
crore reported by the company. Margins were also hit due to a higher
employee cost (12.3% in Q2FY12 against 9.2% in Q2FY11) and other
operating expenses (22.6% in Q2FY12 compared to 19.1% in Q2FY11).
Hence, a slowdown in sales and considerable strike on the margins led
the bottomline to report a loss of | 2.9 crore.
ƒ Highlights of the quarter
EKC’s overall volume sales have witnessed a decline of 7.3% YoY during
the quarter, with the sales of both CNG and industrial cylinders falling by
8.4% YoY and 6.3% YoY, respectively. Though jumbo cylinder sales have
increased by ~2.5x their composition in the overall sales itself, it is very
low (~0.4% of total sales volume in Q2FY12). We believe realisations
have also been lower by ~8% YoY in Q2FY12, thereby pulling down the
topline by ~16%.
ƒ Geographical sales performance
During the quarter, EKC’s sales in India and Dubai witnessed a significant
fall of ~29% (| 83 crore in Q2FY12 from | 116.9 crore in Q2FY11) and
~26% (| 53.3 crore in Q2FY12 vs. | 71.9 crore in Q2FY11), respectively.
Sales in China and the US remained strong and grew handsomely by
~86% and ~117% to | 22.7 crore and | 36.2 crore, respectively.
V a l u a t i o n
At the CMP, the stock is trading at 8.2x and 7.5x its FY12E and FY13E EPS
of | 6.7 and | 7.3, respectively. With a slowdown in Indian operations and
increasing cost pressures for the company, we remain cautious on the
company’s performance in the coming quarters. Hence, we have valued
the stock at 8x its FY13E EPS of | 7.3, assigning it a target price of | 58
with a HOLD rating.
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