Release Date: November 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Everest Kanto Cylinder Ltd (BOM:532684, Financial) reported a strong performance in Q2 FY25 with a 22.7% year-on-year increase in consolidated revenue.
- The company's EBITDA grew by 28.7% year-on-year, reaching INR 53.1 crores, with a margin of 14.5%.
- The PAT saw a notable increase of 47% year-on-year to INR 38.6 crores, driven by strong international operations, particularly in the US.
- The company is expanding its manufacturing capabilities in Egypt and Mundra, India, to meet the growing demand for high-pressure gas, CNG, and hydrogen cylinders.
- Everest Kanto Cylinder Ltd (BOM:532684) is well-positioned to capitalize on the growing opportunities in the seamless cylinder market, both domestically and internationally, with a focus on sustainable energy solutions.
Negative Points
- Despite revenue growth, the company's EBITDA margins in the Indian market remain lower at 7%, with a drop in the casket business margin.
- The Two Wheeler CNG business is not yet a significant contributor to margins, as the product is low-cost and volumes are still ramping up.
- The US business, while profitable, is project-based and may exhibit lumpy performance due to the timing of order execution.
- The company's borrowing has increased significantly, from INR 39 crores to INR 114 crores, impacting interest expenses.
- The market in Nigeria is still in its nascent stage, with infrastructure and currency-related challenges affecting growth potential.
Q & A Highlights
Q: What is driving the strong growth in the Indian business this quarter?
A: The growth is primarily driven by the CNG business, which continues to perform well this quarter. (Unidentified_3)
Q: Despite growth, why have margins remained lower at 7% and when can we expect improvement?
A: There was a drop in the casket business margin, but we expect improvements as we better manage costs. (Unidentified_3)
Q: How is the Two Wheeler CNG business performing, and are you the sole supplier?
A: We are not the sole supplier, and while volumes are increasing, the product is low-cost, so margins are not as high as other segments. (Unidentified_3)
Q: What is the impact of the recent CNG price hike on demand?
A: The price hike has not significantly affected demand as customers are accustomed to CNG pricing. (Unidentified_3)
Q: Can you provide insights into the opportunities from hydrogen and biogas?
A: Biogas is already reflecting in our numbers with more plants coming online, while hydrogen infrastructure is still developing. (Unidentified_3)
Q: What is the order book status for the US business?
A: The US business has an order book of $40 to $50 million, expected to be executed over 18 months. (Unidentified_3)
Q: What is the current capacity utilization, and how will the new facilities impact this?
A: Current utilization is at 70% in India, and the new facilities in Egypt and Mundra will focus on value-added products. (Unidentified_3)
Q: What are the expected peak revenues from the new facilities in Egypt and Mundra?
A: At full capacity, Mundra is expected to generate around INR 300 crore and Egypt around INR 200 crore annually. (Unidentified_3)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
