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D i s m a l p e r f o r m a n c e …
Everest Kanto Cylinders (EKC) posted disappointing results for Q3FY12 as
the topline declined on lower volumes while the bottomline was impacted
by | 30.2 crore of forex losses. The company reported a 27.5% dip in net
sales to | 143.2 crore on the back of sales volumes declining from
2,16,000 cylinders in Q3FY11 to 1,43,000 cylinders in the current quarter.
EBITDA margins plunged from 19.1% in Q3FY12 to 10.7% with lower
sales and high fixed cost. The company posted forex loss of | 30.2 crore
as EKC has exposure to US$35 million FCCBs. Lower EBITDA and foreign
exchange loss resulted in a loss to the tune of | 22.2 crore in the quarter.
ƒ Highlights of the quarter
The company witnessed a 37% decline in sales volume mainly on
account of low demand in Dubai and India. The decline in volumes was
due to ~44% decline in demand for CNG cylinders. Industrial cylinders
volumes also declined by 14%. However, Jumbo cylinders sales volumes
at ~700 are sustainable. Average realisations increased by 18% mainly
due to higher CNG and jumbo cylinders realisations. The company tried
to improve margins in CNG cylinders by taking price hikes.
ƒ Geographical sales performance
During the quarter, EKC’s sales in India and Dubai witnessed a significant
fall of ~25% to | 80 crore and ~64% to | 78 crore, respectively. However,
sales in China and the US sustained at | 17.6 crore and | 39.5 crore,
respectively. The weak volume in Dubai was mainly due to political
uncertainly in the region.
V a l u a t i o n
At the CMP, the stock is trading at 19x and 2x its FY12E and FY13E EPS of
| 5.2 and | 7.3, respectively. With the slowdown in both Indian and Dubai
operations, sales growth witnessed a significant decline. We believe the
company’s performance in the coming quarters would be impacted due
to continuous political uncertainty in Middle-Eastern region. However,
rupee appreciation in the last few days would result in write-back of forex
losses that it incurred in the last two quarters. Hence, we maintain our
HOLD rating on the stock with a price target of | 40 per share
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
PDF link for report- click here
D i s m a l p e r f o r m a n c e …
Everest Kanto Cylinders (EKC) posted disappointing results for Q3FY12 as
the topline declined on lower volumes while the bottomline was impacted
by | 30.2 crore of forex losses. The company reported a 27.5% dip in net
sales to | 143.2 crore on the back of sales volumes declining from
2,16,000 cylinders in Q3FY11 to 1,43,000 cylinders in the current quarter.
EBITDA margins plunged from 19.1% in Q3FY12 to 10.7% with lower
sales and high fixed cost. The company posted forex loss of | 30.2 crore
as EKC has exposure to US$35 million FCCBs. Lower EBITDA and foreign
exchange loss resulted in a loss to the tune of | 22.2 crore in the quarter.
ƒ Highlights of the quarter
The company witnessed a 37% decline in sales volume mainly on
account of low demand in Dubai and India. The decline in volumes was
due to ~44% decline in demand for CNG cylinders. Industrial cylinders
volumes also declined by 14%. However, Jumbo cylinders sales volumes
at ~700 are sustainable. Average realisations increased by 18% mainly
due to higher CNG and jumbo cylinders realisations. The company tried
to improve margins in CNG cylinders by taking price hikes.
ƒ Geographical sales performance
During the quarter, EKC’s sales in India and Dubai witnessed a significant
fall of ~25% to | 80 crore and ~64% to | 78 crore, respectively. However,
sales in China and the US sustained at | 17.6 crore and | 39.5 crore,
respectively. The weak volume in Dubai was mainly due to political
uncertainly in the region.
V a l u a t i o n
At the CMP, the stock is trading at 19x and 2x its FY12E and FY13E EPS of
| 5.2 and | 7.3, respectively. With the slowdown in both Indian and Dubai
operations, sales growth witnessed a significant decline. We believe the
company’s performance in the coming quarters would be impacted due
to continuous political uncertainty in Middle-Eastern region. However,
rupee appreciation in the last few days would result in write-back of forex
losses that it incurred in the last two quarters. Hence, we maintain our
HOLD rating on the stock with a price target of | 40 per share
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