Everest Kanto reported a total revenue of Rs. 380 Cr.

The net sales stood at Rs 380.53 crore in June 2022, up 13.58% from Rs 335.02 crore in June 2021. The quarterly net profit was at Rs. 38.70 crore in June 2022, down 44.1% from Rs. 69.23 crore in June 2021. The EBITDA stands at Rs. 61.23 crore in June 2022, down 32.98% from Rs. 91.36 crore in June 2021. The company incurred a total expense of Rs. 331 Cr as compared to Rs. 257 Cr in June 2021.

Increasing CNG and Hydrogen Consumption To Drive Cylinder Demand:

Everest Kanto Cylinders Ltd. is a major player in High Pressure Seamless Steel Gas Cylinders. It generated its major revenue from India, which was around 270 Cr with a profit of Rs. 44 Cr. while the USA contributed 57 Cr. with  profit of Rs.2 Cr. The UAE reported total revenue of Rs. 51 Cr. and a net profit of Rs. 8 Cr. They manufacture a wide range of cylinders for industrial gases, medical gases, fire fighting equipment, beverage industry accumulator shells, aerospace scientific research, and CNG-NGV cylinders.

The auto OEMs have significantly reduced diesel vehicle production due to rising costs and lower demand. The Vehicle Scrappage Policy is expect to drive new vehicle sales and CNG adoption. The STCs continue to convert diesel bus fleets to CNG. CNG prices in India are link to key international benchmarks and are at  significant discount to other liquid fuels. The CNG vehicles operate at a much lower cost per km.India is a participant in the global commitment to set net zero emission targets.

Over 30 countries have released hydrogen roadmaps, committed more than USD 70 billion in public funding, and total investments are expected to exceed USD 300 billion in hydrogen spending through 2030. The government of India notified its Green Hydrogen Policy with the aim of making India a Green Hydrogen Hub. This involves scaling up the use of domestically produced hydrogen to significantly reduce energy imports. The policy is in line with the country’s pledge to be carbon neutral by 2070. India’s hydrogen demand is expected to increase five-fold by 2050, from 6 MPTA in 2020. 80% of the demand in 2050 is expected to be green in nature.

Valuations:

Everest Kanto EPS has decreased to Rs. 3.45 in June 2022 from Rs. 6.17 in June 2021. The debt to equity ratio was 0.14x, whereas the asset turnover ratio was at 0.8x. The interest coverage ratio was at 33.6x compared to 6.3 in June 2021. This was due to a reduction in debt. The scrip is trading at Rs. 123, up by 5% on Monday.