Everest kanto cylinders [BSE: 532684|nse: EKC]
CMp: 118.20 | tp: 162 | duration: 12-18 months August 23, 2010
company
Everest Kanto Cylinders (EKC) is engaged in manufacturing of industrial cylinders for oxygen, hydrogen, nitrogen, argon, helium, air, etc. It is also engaged in manufacturing of allied products such as cylinder valves, value protection guards, value protection caps, trolleys, purge bottles and industrial equipment.
EKC has over 1.5 million High Pressure gas cylinders and 5.00,000 CNG cylinders in service and three manufacturing plants in India Aurangabad, Tarapur and Gandhidam and Middle East (UAE) JAFZA in Dubai.
COMPANY DATA
Share Data
| Market Cap (Rs) | 1268.18 crores |
| Issued Shares | 50,244,642 |
| 52 wk High/Low (Rs) | 221.80/107.80 |
Valuation Ratios
| To 31 Mar | FY09 | FY10 | FY11 |
| Sales (Rs in Cr) | 357.15 | 354.44 | 452 |
| EPS (Rs) | 3.68 | 4 | 6.5 |
| +/- % | -21.1 | 8.69 | 100 |
| P/E (x)
| 32.56 | 30.2 | 14.78 |
Shareholding Pattern (%) (Quarter ending June,2010)
| Promoters | 56.62 |
| FIIs | 14.44 |
| MFs | 9.34 |
| Public | 7.75 |
| Others | 11.85 |
positives
1. De-regulation of the fuel prices is a huge boost for EKC. A lot of vehicle manufacturers like Maruti, Tata & Hyundai are beginning to offer CNG variants for their products.
2. Ministry of petroleum and natural gas in its vision-2015 program plans to bring CNG & PNG supplies to 200 cities in India. This will also contribute directly to EKC’s topline. Right now EKC is the only company with such a scale to operate in India.
3. Ex-Delhi, petrol costs 51.43, diesel 37.62 and CNG 27.50 respectively. CNG is significantly cheaper than petrol & diesel and makes a viable fuel alternative.
4. 6.5mn preferential equity to Reliance Capital Asset Management (4mn to Reliance growth fund and 2mn to Reliance Regular savings fund). Significant portion of this money is used to retire debts, which gives more confidence to the investor.
5. EKC has been rewarding its investors with good dividends every year. Management is investor friendly.
concerns
1. Economic recession is a major concern for EKC in overseas markets. China and US segments are underutilized.
2. Any fluctuations in petrol & diesel prices, affects CNG usage and hence may affect EKC business, but this is almost not going to happen.
3. High input cost is a major cause for concern for EKC especially in overseas businesses since the capacity utilization is not up to the mark. Seamless steel tube prices are volatile in nature and could affect the bottom line.
4. Currency fluctuations are also a concern for EKC.
5. Domestic market will prove to be big for EKC. But Indian Government is not known to execute projects at a brisk pace. Any slowness affects the profitably considerably, though this is a short term irritant.
valuations
EKC is a long term play. Invest a good chunk in EKC and forget about it for 5 years and you can be rest assured that you will rewarded in the end. EKC is currently trading at 14.78 PE FY11 and has the potential to move to target of 162 in the next 12-18 months. I recommend a BUY on this counter with a 2+ years perspective and get rewarded.
disclaimer
I am a newbie into equity research. This blog is to start posting my research reports on various stocks. The information and views presented in this report are prepared by me. The information is based on my analysis and on sources available on the public domain. Investors are requested to use this report as guidance and the final decision to be made by the investors themselves. I will not be responsible for any loss incurred by the investor based on this report.Peer Comparison
1 comment:
its a favourite for me too. not sure on whats happening on its Iran exposure and investments in Dubai.
the recent placement with reliance MF is interesting as it is done at significant premium to market price. concerned why the mkt price is falling in a rising market. hope there is no surprise negative development thats not visible to investing public.
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