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About the Company
Everest Kanto is the largest CNG and industrial cylinder
manufacture in India. The company has market leadership
position in domestic market and exports to over 20 countries
all over the world including Iran and Pakistan which are the
largest CNG vehicle market in the world. The company
follows highest quality standards and enjoys long standing
relationship across its broad customer base of companies
around the globe.
Strong under currents for NGV vehicle growth
India has the 5th largest fleet of natural gas vehicles in the
world but most importantly holds the highest NGV growth
potential in the world with over 220 cities planned for CNG
development, a nationwide distribution pipeline by 2012
India’s CNG pipeline will stretch 12,000 km, connect 15 states
making it the number one NGV investment opportunity in the
world today
Outlook & Valuation
Given the strong cost economics for CNG conversion
supported by massive infrastructure build over the next 3
years, we expect Everest Kanto to reap the benefits of strong
CNG demand backed by solid Balance Sheet (Debt/Equity-
0.5) and strong operating cash flows (even in FY10 where PAT
fell by 69%, its operational cash flow jumped by 50% to Rs.
192 cr.) attributable to its excellent working capital
management which is crucial given huge current assets. It has
constantly used its cash flow to deleverage its balance sheet
and for up gradation of existing facility. At the CMP, The
stock trades at P/E of 7.27x and 5.55x FY12E and FY13E
respectively. We put a BUY rating on the stock with a
target price of Rs. 132 (12X EPS FY12E) providing an
upside of 65% from the current levels.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
About the Company
Everest Kanto is the largest CNG and industrial cylinder
manufacture in India. The company has market leadership
position in domestic market and exports to over 20 countries
all over the world including Iran and Pakistan which are the
largest CNG vehicle market in the world. The company
follows highest quality standards and enjoys long standing
relationship across its broad customer base of companies
around the globe.
Strong under currents for NGV vehicle growth
India has the 5th largest fleet of natural gas vehicles in the
world but most importantly holds the highest NGV growth
potential in the world with over 220 cities planned for CNG
development, a nationwide distribution pipeline by 2012
India’s CNG pipeline will stretch 12,000 km, connect 15 states
making it the number one NGV investment opportunity in the
world today
Outlook & Valuation
Given the strong cost economics for CNG conversion
supported by massive infrastructure build over the next 3
years, we expect Everest Kanto to reap the benefits of strong
CNG demand backed by solid Balance Sheet (Debt/Equity-
0.5) and strong operating cash flows (even in FY10 where PAT
fell by 69%, its operational cash flow jumped by 50% to Rs.
192 cr.) attributable to its excellent working capital
management which is crucial given huge current assets. It has
constantly used its cash flow to deleverage its balance sheet
and for up gradation of existing facility. At the CMP, The
stock trades at P/E of 7.27x and 5.55x FY12E and FY13E
respectively. We put a BUY rating on the stock with a
target price of Rs. 132 (12X EPS FY12E) providing an
upside of 65% from the current levels.
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