Everest Kanto Cylinder – Strong Results

EKC’s consolidated 3QFY08 net profit of Rs294m was up 44% yoy and exactly in line with expectations. EBITDA margin came in at 37%, substantially higher than the previous two quarters (28-31% range).

Average realizations on a consolidated basis remained strong at Rs8.0K/cyl, relatively flat on a qoq basis. CNG cylinders accounted for c.70% of sales. Total sales volumes from Dubai were sequentially higher and accounted for 30% of overall sales (typically 20-25%), primarily owing to inter-segmental transfers from Tarapur.

Citi reiterates a target of Rs 437 on Everest Kanto Cylinder on the back of 47% EPS CAGR. Our Analyst recommends a BUY with a Target Price of Rs 360.