CRISIL assigns valuation grade of 5/5 to Everest Kanto

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CRISIL assigns valuation grade of 5/5 to Everest Kanto

CRISIL Research has come out with its report on Everest Kanto Cylinder. The research firm has maintained the fundamental grade of 3/5 to the company in its November 09, 2011 report.

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Everest Kanto BSE | NSE 31/05/12 Are Mutual Funds betting on Everest Kanto?

CRISIL Research has come out with its report on Everest Kanto Cylinder . The research firm has maintained the fundamental grade of 3/5 to the company in its November 09, 2011 report.

Everest Kanto Cylinder's (Everest Kanto's) Q2FY12 revenues and EBITDA were lower than CRISIL Research's estimates. Its Indian and Dubai operations were particularly subdued. Reported PAT for the quarter turned red due to foreign exchange losses on account of revaluation of FCCBs. Post our interaction with the management, we will revisit our estimates and fair value. We maintain the fundamental grade of 3/5.

Q2FY12 result analysis
• Q2FY12 revenues declined by 16.2% y-o-y to Rs 1,720 mn. Revenues from the Indian operations declined 29% y-o-y to Rs 830 mn and Dubai operations by 26% y-o-y to Rs 533 mn. But these were partially offset by more than double revenues from the US operations at Rs 362 mn and 86% higher revenues from China at Rs 227 mn.

• EBITDA declined 26% to Rs 309 mn due to lower sales and lower operating profitability due to higher costs. EBITDA margin declined 238 bps from 20.3% to 17.9% in Q2FY11.

• The company was in the red with net loss of Rs 30 mn. This was mainly due to restating of the company's FCCB amount of US$35mn due to rupee depreciation (the FCCBs were issued in FY08; due for redemption in FY13). Adjusted for this, the company recorded a profit of Rs 205 mn.

Valuations: Current market price has strong upside
We continue to use the discounted cash flow method to value Everest Kanto. At the current market price of Rs 58, our valuation grade is 5/5.

Disclaimer: This report (Report) has been commissioned by the Company/Investor/Exchange and prepared by CRISIL. The report is based on data publicly available or from sources considered reliable by CRISIL (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. Opinions expressed herein are CRISIL's opinions as on the date of this Report.  The Data / Report are subject to change without any prior notice. Nothing in this Report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The Report is not a recommendation to buy / sell or hold any securities of the Company. CRISIL especially states that it has no financial liability, whatsoever, to the subscribers / users of this Report. This Report is for the personal information of the authorized recipient only. This Report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person or published or copied in whole or in part especially outside India, for any purpose.

© CRISIL Limited . All Rights Reserved. Published under permission from CRISIL"

To read the full report click on the attachment