Everest Kanto Cylinder Limited Q4 FY22 Earnings Conference Call Insights

Key highlights from Everest Kanto Cylinder Limited (EKC) Q4 FY22 Earnings Concall

Q&A Highlights:

• Ravi Naredi of Naredi Investments asked about EKC’s current order book and the sector contributing to those orders. Puneet Khurana MD replied that the order book is very strong and it’s mainly from the CNG segment where the orders are coming from in the range of INR350-400 crores.

• Ravi Naredi of Naredi Investments also asked about the capacity utilization in 4Q and ROCE outlook for FY23.  Puneet Khurana MD replied that the capacity utilization for the quarter was around 90%. For ROCE, EKC added that it should improve from earlier levels

• Ravi Naredi of Naredi Investments enquired why EKC is expanding in UAE despite the company getting lower margin compared to India. Puneet Khurana MD answered that FY23 has been good vs. FY22 in US and UAE and also COVID is behind everyone. Also green fuel is getting a large push from all over the world. So it should improve.

• Bhavesh Chauhan with IDBI Capital asked about volume growth outlook and sustainable margin for FY23. Puneet Khurana MD replied that the company is looking at 10-15% growth. And on margin, EKC expects 20-24% is doable and sustainable in FY23.

• Bhavesh Chauhan with IDBI Capital asked about product mix going forward. Puneet Khurana MD clarified that it should be around 60:40. Maybe CNG will become 60% as it’s growing well and industrial will be around 40%.

• Deepak Poddar from Sapphire Capital asked about the price hikes taken for EKC products on avg. over the last one year. Puneet Khurana MD said that definitely whenever the steel prices are going up, EKC is approaching the customer. EKC added that it’s very difficult to give a number on it.

• Rajesh Agarwal of Moneyore Capital asked if the company is expecting a threat with CNG cylinders getting imported. Puneet Khurana MD answered that the imported cylinders are not cheaper, so it’s not a threat.

• Sunil Jain from Nirmal Bang asked about the status of the Hungry JV. Puneet Khurana MD replied that due to the current situation in Russia, EKC is just waiting and watching the situation to improve. The company has delayed it for some time till the Russian situation is cleared.

• Sunil Jain from Nirmal Bang enquired about the US business dipping into losses and its outlook. Puneet Khurana MD answered that there has been some year-end provisions, but definitely now the US business should pick up. It’s mainly dipped due to a lot of business that comes from defense and other things were delayed.

• Radhika Kabra from Alpha Invesco asked about the percentage of revenue from the casket business since EKC doesn’t exist in the composite cylinder category. Puneet Khurana MD replied that the company has revenue in casket business; it may be around 10-12%.

• Radhika Kabra from Alpha Invesco also asked about the reduction in sales in the UAE subsidiary. Puneet Khurana MD answered that the reason for a dip is that purchase requirement of the customer has changed. So there has been some delays of material leaving the plant. However, it should not be an issue going forward.

• Sachin Kasera from Svan Investment asked about the peak revenue in FY22 for Dubai. Puneet Khurana MD said that Dubai did INR240 crores in revenue in FY22 and added that there is still room of around 20% improvement going forward.