Hold Everest Kanto; target of Rs 96: PINC Research

7655 Investors following Everest Kanto. Share this News with them.

0

Like this story, share it with millions of investors on M3

Hold Everest Kanto; target of Rs 96: PINC Research

PINC Research has recommended hold rating on Everest Kanto Cylinder with a target of Rs 96, in its May 30, 2011 research report.

Post your opinion here

 

0

Tweet

Share on Tumblr

RELATED NEWS Buy Vinati Organics; target of Rs 95: Nirmal Bang Buy Repro India; target of Rs 150: Sunidhi Securities Buy Godawari Power; target of Rs 268: ULJK Securities ALSO READ See previous views by PINC Research See what other Experts & Brokerages are saying about Everest Kanto See messages about Everest Kanto Everest Kanto BSE | NSE 01/06/12 Are Mutual Funds betting on Everest Kanto?

PINC Research has recommended hold rating on Everest Kanto Cylinder with a target of Rs 96, in its May 30, 2011 research report.

"Everest Kanto Cylinder Ltd's (EKC) Q4FY11 results were better than our expectation as net sales grew by 30.2% YoY to Rs2.4bn (PINCe Rs2.1bn), mainly driven by Dubai operation. OPM stands at 20% (against -8% in Q4FY10) on the back of lower raw material cost. Consequently, the adj net profit is Rs291mn (PINCe Rs174mn) against Rs14mn in Q4FY10."

"Sales from Dubai facilities grew at 90% YoY in FY11 and contributed 46% in the topline. Capacity utilisation of this facility was ~110% in FY11. PBIT margins for Dubai increased to 29.6% against 12.5% YoY. It contributed Rs910mn at PBIT resulting in total PBIT of Rs741mn for EKC in FY11 (due to loss from Chinese and USA facilities) Chinese and US facilities reported a combined loss of Rs389mn at PBIT and dragged down the robust performance from Dubai facility. Though the margins are improving sequentially for Indian facilities, however, at 8.8% in Q4FY11 are still far below their levels of ~20% in FY08 and FY09."

"Dubai is expected to remain saviour in near future. Major concern remains due to delays in development of CNG infrastructure in India resulting is sluggish conversion rate from Petrol/Diesel to CNG. Margins from Indian operations are expected to remain under pressure in near term. Post commissioning of Kandla unit (plate to be used as raw material) in Q1FY12, EKC should be in a position to expand its market share. USA and China facilities are also expected to remain under pressure for some more quarters due to lower offtake."

"We have increased our estimates for FY12 by 7.6% on the back of higher contribution from Dubai facility, resulting in lower effective tax rate. At the CMP of Rs86, Everest Kanto is trading at a P/E of 10.7x and EV/EBITDA of 6.4x for FY12E. We maintain our 'HOLD' recommendation with an increased target price of Rs 96 (12x FY12 estimates)," says PINC Research report.  

FIIs holding more than 30% in Indian cos

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management.Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment