Everest Kanto Cylinder Limited — Q3 FY26

Everest Kanto Cylinder Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=9zx0o38XjIo Published: 2 months ago

0:00 Ladies and gentlemen, good day and welcome to earnings conference call of Everest Contour Cylinder Limited. As a 0:08 8 seconds reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance 0:17 17 seconds during this conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being 0:26 26 seconds recorded. I now hand the conference Otum Stan Pujari from CDR India. Thank you and over to you Mr. Pjari. 0:35 35 seconds Thank you. Good evening everyone and thank you for joining us on Everest Canto cylinders Q3 and 9M FI26 earnings 0:44 44 seconds conference call. We have with us today Mr. Punit Kurana managing director and Mr. Sanjil Kapoor whole time director and CFO of the company. 0:54 54 seconds We'll initiate the call with opening remarks from the management following which we'll have the forum open for a question and answer session. 1:02 1 minute, 2 seconds Before we begin, I would like to state that some statements made in today's call may be forwardlooking in nature and a disclaimer to this effect has been 1:10 1 minute, 10 seconds included in the results presentation shared with you earlier. 1:14 1 minute, 14 seconds I will now request Mr. Punit Kurana to make his opening remarks. Thanks. 1:20 1 minute, 20 seconds Good evening everyone and thank you for joining our conference call. I I will begin by sharing the overview of our performance for the quarter followed by 1:28 1 minute, 28 seconds a Q&A session. We delivered a strong performance in Q3 FI26 with a notable 1:36 1 minute, 36 seconds improvement in profitability driven by improved realization, favorable product mix and continued focus on cost 1:43 1 minute, 43 seconds discipline. Consolidated revenue stood at rupees 365 crores. I beta grew 48% 1:50 1 minute, 50 seconds year-onear to rupees 59.2 crores with consolidated margins expanding to 16.2% 1:58 1 minute, 58 seconds and improved 534 BSP. PBT stood at 53.6 crores and PAT for the quarter came in 2:07 2 minutes, 7 seconds at rupees 35.7 crores reflecting a growth of 98.9% yearonear. 2:15 2 minutes, 15 seconds On standard on basis revenue for the quarter stood at rupees 4 247 crores. I 2:21 2 minutes, 21 seconds beta margins expanded to 23.1% compared to 14.9% in the same period last year reflecting 2:30 2 minutes, 30 seconds stop strong operating performance during the quarter. Standard profit after tax stood at rupees 36 crores registering a 2:38 2 minutes, 38 seconds growth of 57.6% 6% yearonear for the 9-month period ended FI26 2:44 2 minutes, 44 seconds standalone IITA margin stood at 17.3% and our endeavor remains to build upon 2:51 2 minutes, 51 seconds this performance over time as margins are influenced by the product mix ex executed in any given quarter. We remain 3:00 3 minutes focused on optimizing both volume and value to drive sustainable and profitable growth. Our Indian operations 3:08 3 minutes, 8 seconds remained the primary contributor to overall performance supported by steady demand across CNG and industrial applications 3:15 3 minutes, 15 seconds in the US. Performance continued to remain reflect the order-driven nature of the business with healthy pro progress on yearbyear 3:24 3 minutes, 24 seconds basis supported by strong order pipeline to support future growth opportunities. 3:30 3 minutes, 30 seconds We have approved an capex of USD 5.5 million in in our wholly owned subsidiary CPI CP 3:38 3 minutes, 38 seconds industries to enhance manufacturing capabilities with a focus on larger diameters and type force cylinders. The investment will strengthen our position 3:46 3 minutes, 46 seconds to address emerging clean energy and industrial application and support growing demand across North and South America. Our operations in Dubai remain 3:55 3 minutes, 55 seconds subdued during the quarter. However, we continue to focus on strengthening market engagement and improving operating performance in the region over 4:04 4 minutes, 4 seconds time. Our capacity expansion front, we have successfully commenced operations at our Greenfield Mundra facility with 4:12 4 minutes, 12 seconds one production line now operational. The remaining two lines are expected to be established over the coming months. We 4:19 4 minutes, 19 seconds have also approved additional capex of rupees 30 crores to strengthen capabilities and enhance operational readiness at the facility. 4:27 4 minutes, 27 seconds In addition, our Egypt facility is progressing steadily and is expected to commence operation by May 26. The 4:35 4 minutes, 35 seconds facility will focus on addressing domestic demand while supporting regional market requirements and will further strengthen our global manufacturing footprint. 4:44 4 minutes, 44 seconds Overall, we remain encouraged by the improving demand environment and the progress on our strategic initiative. 4:51 4 minutes, 51 seconds With new capa capacities coming online, a strong order pipeline and continued focus on operational efficiency. We 4:59 4 minutes, 59 seconds believe we are well positioned to support future growth with sustaining healthy profitability. With that, I conclude my opening remarks and request 5:06 5 minutes, 6 seconds the moderator to open the floor for questions. Thank you. 5:10 5 minutes, 10 seconds Thank you very much. We will now begin with the question and answer session. 5:14 5 minutes, 14 seconds Anyone who wishes to ask a question may press star and one on data touchstone telephone. 5:20 5 minutes, 20 seconds If you wish to remove yourself from the question queue, you may press star and do. 5:25 5 minutes, 25 seconds Participants are requested to use answers while asking a question. 5:30 5 minutes, 30 seconds Ladies and gentlemen, we will wait for a moment while the question symbols. 5:36 5 minutes, 36 seconds Participants, you may press star and one to ask the question. 5:45 5 minutes, 45 seconds First question is from the man of Chira Goi from NV alpha fund management. 5:49 5 minutes, 49 seconds Please go ahead. Uh hello sir, I have one question. Uh what is leading to margin expansion in India? Talking about 5:57 5 minutes, 57 seconds the product mix changes and what is the mix that you are doing currently? 6:05 6 minutes, 5 seconds Uh you know our focus is uh you know on uh little higher end products you know. 6:10 6 minutes, 10 seconds So we have some products in uh in CV market, some products in defense, some products in semiconductor industry. So 6:18 6 minutes, 18 seconds that's has been the product mix and that's why the margins in this quarter have been quite good. 6:26 6 minutes, 26 seconds Okay. And how much it contributing approximately those kind of products? 6:31 6 minutes, 31 seconds I don't have the breakup but uh this but these have contributed to uh you know bettering the margin. 6:39 6 minutes, 39 seconds Okay. Thank you so much. 6:44 6 minutes, 44 seconds Thank you participants. You may press star and one to ask a question. 6:50 6 minutes, 50 seconds Next question is from land of Anovo from Precision Capital. Please go ahead. Uh sir, am I audible? 6:57 6 minutes, 57 seconds Yeah. Yeah, we can hear you. 6:59 6 minutes, 59 seconds Uh sir, can you uh give some more color on the improving product mix because there's a significant uh margin improvement. 7:07 7 minutes, 7 seconds Yes. So uh what happened to the product mix like uh did we see a significant uptake in the cylinders for commercial vehicles or what happened? 7:18 7 minutes, 18 seconds It was all you know there's a mix you know there is definitely an uptake you know the commercial vehicle business has been quite subdued over the last two 7:25 7 minutes, 25 seconds years. So there's definitely you know now with the the growth of CNG infrastructure definitely the C uh the 7:32 7 minutes, 32 seconds CV volumes are have increased uh compared to uh the the previous quarters and we think this trend is going to 7:40 7 minutes, 40 seconds continue and there's a new segment also in in semiconductor where we've entered and there also we've seen some uh you 7:47 7 minutes, 47 seconds know good order book coming our way. So this is you know all contributing to the the margin. 7:54 7 minutes, 54 seconds Okay. And sir, will it be possible to share like uh uh the contribution of auto cylinders uh in in this quarter 8:02 8 minutes, 2 seconds like uh the mix between auto and industrial? No, we don't have that Vidash. Yeah. 8:10 8 minutes, 10 seconds Okay. 8:12 8 minutes, 12 seconds And this trend that you are witnessing in like pickup in commercial vehicle cylinders uh do you find it sustainable? Uh 8:20 8 minutes, 20 seconds yeah yeah of course it's it's been sustainable you know because it's come after a period where you know the consumers were also trying to uh gauge 8:28 8 minutes, 28 seconds uh you know the CG prices because you know sudden rise in the CG prices also you know had pushed them back but now with their uh you know getting used to 8:37 8 minutes, 37 seconds the CG prices even diesel prices are high petrol prices are high so the consumers are more or less now you know are accepting and of course the 8:45 8 minutes, 45 seconds infrastructure of CNG stations you know have been increasing every year so you know with more and more availability ease availability of CNG is just you 8:53 8 minutes, 53 seconds know putting more vehicles and also the OEMs now have more models that you know they are offering to the customers. So the choice for customers have increased 9:02 9 minutes, 2 seconds infrastructure has increased and customer acceptability on you know the fuel pricing has has also been there. So you know all these things are coming 9:10 9 minutes, 10 seconds together. So we feel that this is kind of you know is is is a is a good good sign and uh you know sustainable you 9:19 9 minutes, 19 seconds know it has come after some time where uh you know the the CV market is you know coming uh coming back 9:27 9 minutes, 27 seconds get that so it's also driven by the like uh somewhat revival in commercial vehicle seen that uh we are witnessing 9:35 9 minutes, 35 seconds so it's also driven by that I I don't know about the overall you know uh space of CV but I can only talk 9:42 9 minutes, 42 seconds about CNG you know that's where uh we are finding that uh you know um that this business of CV of CNG segment of 9:50 9 minutes, 50 seconds the CV is growing get that and s in the domestic market uh are we also into like uh composite 10:00 10 minutes cylinder because uh yes yes so uh can you share some more details on 10:07 10 minutes, 7 seconds that like what products we are in are we in type four So we are in we are in type three composite cylinders. 10:15 10 minutes, 15 seconds Yeah. Okay. 10:17 10 minutes, 17 seconds So this is a very is a new market you know and so we are slowly slowly making some headway into this market. 10:25 10 minutes, 25 seconds Okay. And uh like have we uh like are we entering into type four as well? 10:32 10 minutes, 32 seconds No not right now. We are more focused on type three right now. 10:37 10 minutes, 37 seconds Get that. uh I'll get back in the future. 10:39 10 minutes, 39 seconds In the future definitely you know uh as as you know this composite business grows you know we are also learning and evolving and you know we'll definitely 10:47 10 minutes, 47 seconds uh we are making type four in the company in the US. So definitely something that is there for us in the future to plan and you know as the 10:55 10 minutes, 55 seconds market evolves and things uh you know um become more mature definitely we will also look into uh you know development of type four for Indian market. 11:05 11 minutes, 5 seconds Okay. Uh, thanks. I'll get back. Thank you. 11:10 11 minutes, 10 seconds Thank you. Next question is from the line of Gonit Singh from Counter Cycl. Please go ahead. 11:18 11 minutes, 18 seconds Sir, thank you for this opportunity. I would like to understand that u I mean are the 16% the beta margins sustainable going forward? 11:26 11 minutes, 26 seconds Yes. Yeah. I think I think they should No, they should be they should be. 11:33 11 minutes, 33 seconds All right. So we have done margins of about 24% in the past as well. So according to you what what are the 11:39 11 minutes, 39 seconds sustainable state margins going forward and uh I mean do you believe that uh 11:47 11 minutes, 47 seconds going forward at 17% would be the margin because of 15 to 17 you can you can consider that you know 15 to 17% yes with the product 11:55 11 minutes, 55 seconds mix and everything I think the the yeah it should be and what are the capacity utilization across our plants currently 12:04 12 minutes, 4 seconds it's about 70 75% about 75 5%. 12:09 12 minutes, 9 seconds Can you get plant-wise utilization and also the revenue potential from new plants and the coming capeex their 12:16 12 minutes, 16 seconds commercialization timeline as well as revenue potential from them as well? 12:23 12 minutes, 23 seconds Is is more or less the same but it's difficult to give you the numbers over a call. Um I I I'll keep it a note and you 12:32 12 minutes, 32 seconds know maybe we can uh uh uh you know work on this and give it to you. 12:39 12 minutes, 39 seconds All right. Uh and also uh All right. Got it. So and uh do you have any internal 12:46 12 minutes, 46 seconds uh targets in terms of topline and bottom line for FY27 that you're targeting with the new facility coming in and the current product mix? 12:56 12 minutes, 56 seconds I think about 15 to 20% is what we are targeting. You know we would like to grow at that. All right. And maintaining the margins. 13:05 13 minutes, 5 seconds Yeah. Yeah. Yeah. Of course. Got it. Thank you very much. Thank you. Thank you. Thank you. 13:13 13 minutes, 13 seconds Thank you. Next question is from the line of Jatan Damana from Swan Investments LLC. Please go ahead. 13:20 13 minutes, 20 seconds Uh good evening sir. Thank you for the opportunity. 13:23 13 minutes, 23 seconds Sure. focus on the domestic performance but if I want to understand in the UA business from a last couple of quarters 13:32 13 minutes, 32 seconds the numbers has been subdued and we are working on the strength product link enriching the market. So when can one 13:39 13 minutes, 39 seconds can actually see a benefit of the effort that has been put in the UA kick in? 13:47 13 minutes, 47 seconds I think I think in the in the coming quarters I think we we should be able to see you know we were expecting uh you know some businesses to come up in uh in 13:56 13 minutes, 56 seconds the Middle East and in Africa region but things have just little been been slow uh you know so hopefully in the coming quarters we should expect that uh you 14:05 14 minutes, 5 seconds know the business should uh come up but do we expect to break even in the UA business in FI27 or we should operate at 14:14 14 minutes, 14 seconds the of course Yes. 14:18 14 minutes, 18 seconds And in terms of the contract I mean are we looking at to sign up any significant cont I mean a decent size contract with the Middle East or the South Africa or 14:27 14 minutes, 27 seconds are we in touch so that this this which gives us the there was always there was always a running customers and things like that you know so it's just a little bit of a 14:35 14 minutes, 35 seconds slowdown that has uh happened uh you know in the last two three quarters. So hopefully this uh you know this thing will turn around in the in the in in the 14:44 14 minutes, 44 seconds in the new year and uh you know we'll be seeing the business of course. 14:51 14 minutes, 51 seconds Okay. So one at what sorts of profitability or what sorts of revenue contribution one can expect that UI to be a break even? 15:03 15 minutes, 3 seconds Oh another 10% higher whatever they're doing 10% more than this. Yeah. I mean you know whatever they're doing at least 10% higher would uh would be a break even. 15:14 15 minutes, 14 seconds Okay. 10% higher and probably we expect that to come in the FI27. Yeah. Yeah. Yes. Yes. Yes. 15:19 15 minutes, 19 seconds Yeah. Coming on to our US business now after a long time we are probably doing an incremental capex of $5.5 million. 15:27 15 minutes, 27 seconds What sorts of visibility do we have in the US market or is this particular capex is backed by any contract that you are signing up with the customers? Yes. 15:38 15 minutes, 38 seconds Yes. So you know US business you know what is happening is that lots of the the larger vehicles are running are being converted into CNG. Mhm. 15:47 15 minutes, 47 seconds You know so so we are we are already uh you know working with an OEM who wants us to expand capacity. So this is this capacity expansion is exactly as per the 15:56 15 minutes, 56 seconds customer contract. So we expect that about additional 100 crores should be added to um uh you know to the to the 16:05 16 minutes, 5 seconds top line once this expansion is complete in u in in 2728. 16:11 16 minutes, 11 seconds So this is all backed with customer contracts and uh you know with the with type four expansion in the US. So then 16:18 16 minutes, 18 seconds it's try to assume that FI28 there will be 100 crores incremental revenue coming up from the US business with a margins 16:25 16 minutes, 25 seconds of upwards of 20% given the type four in the US are always good see margins in the US have always been very good 16:33 16 minutes, 33 seconds yeah perfect so yeah and on the Egypt front now once the capacity comes in month of May or June 16:41 16 minutes, 41 seconds will it take a time for the customer to approve our product or probably from the customer approval is already there by 16:49 16 minutes, 49 seconds the CMC because the same customers were buying previously also. So customer approval is is not such a big challenge. 16:56 16 minutes, 56 seconds Uh and you know most of the customers are like fleet owners and uh you know Egypt is not so much on the you know 17:03 17 minutes, 3 seconds like an OEM customer where approval processes take long time you know so so immediately as the product I'm I'm probably sure that they 17:11 17 minutes, 11 seconds have orders already in hand. It's just the customers are waiting for the facility to start which is expected month of May right? 17:19 17 minutes, 19 seconds Yeah. Yeah. 17:20 17 minutes, 20 seconds And what sorts of revenue one can expect for the first year? I think uh to 60. 17:27 17 minutes, 27 seconds Yeah. About 50 to 60 cr rupees and margin will be similar to the domestic business or it will be on the lower end. first in the you know in the 17:35 17 minutes, 35 seconds beginning maybe the margins will be a little u you know low but uh you know when it ramps up definitely the the margins will be much better. 17:45 17 minutes, 45 seconds So that means if probably if one can look then FI27 could be more of a consolidation and FI2 17:53 17 minutes, 53 seconds more more benefits coming on from the US with a higher margin Egypt and UA to contribute profitability. 18:00 18 minutes Yes. Yeah. Correct. Yes. Correct. 18:03 18 minutes, 3 seconds Right. And on the India business other than Muna the the remaining two lines when are we expecting and what sort of capacity that will increase too? 18:23 18 minutes, 23 seconds It will increase our capacity by what percentage? Uh this is what is percentage? 18:34 18 minutes, 34 seconds Yeah around 15%. 18:36 18 minutes, 36 seconds Around 15%. Sure. So that's all from my side. I'll come back in if you have one more question. Thank you and all the best. Thank you so much. Thank you. 18:45 18 minutes, 45 seconds Thank you. Participants you may press star and one to ask a question. 18:50 18 minutes, 50 seconds Next question is from the line of Reed Jen from First Water Capital Advisors. Please go ahead. 18:56 18 minutes, 56 seconds Yeah, thank you for the opportunity. But I wanted to know uh what is the order book for USA? 19:04 19 minutes, 4 seconds Around uh how much? 50 million 75 million. 19:09 19 minutes, 9 seconds Okay. And execution time to maybe 2 years. 19:16 19 minutes, 16 seconds Okay. 19:18 19 minutes, 18 seconds And I wanted to ask about the product mix since we are supplying into uh defense and semiconductor industry and 19:26 19 minutes, 26 seconds these two industries are growing in India. So do you feel that uh the product mix would be sustainable going 19:36 19 minutes, 36 seconds forward or there will be a uh up and down in the product mix? 19:42 19 minutes, 42 seconds See you know there will definitely be up and down you know uh because defense is all long-term so definitely some projects will come and we will have 19:50 19 minutes, 50 seconds these uh you know maybe something special but uh but there is you know good visibility good uh you know this 19:58 19 minutes, 58 seconds thing from the customers that there will be good requirement in in in these segments okay and also regarding the US tipex 20:08 20 minutes, 8 seconds that we have announced uh 5 $5.5 million dollar. So I believe that uh the volatility of the USA revenue will 20:17 20 minutes, 17 seconds reduce because the incremental revenue will be strictly right every year. 20:22 20 minutes, 22 seconds Yes. Yes. Yes. Definitely this is more will be a more consistent this this expansion will give the company a more consistent revenue revenue uh model. 20:32 20 minutes, 32 seconds Okay. 20:34 20 minutes, 34 seconds And any update on the GST case which we had in India? No, no, no update as as such. 20:43 20 minutes, 43 seconds But uh any timeline which you have like when we can hear some update. 20:49 20 minutes, 49 seconds No, we are also waiting uh you know on this. Okay, got it. 20:57 20 minutes, 57 seconds Yeah, that's it from all the best. Thank you. 21:02 21 minutes, 2 seconds Thank you. Next question is from the line of Aayish Kumar Birindra an individual investor. Please go ahead. 21:15 21 minutes, 15 seconds Aish Kumar may request to proceed with your question. 21:24 21 minutes, 24 seconds Due to no response, we move to the next participant. 21:28 21 minutes, 28 seconds Next question is from the end of Charel individual investor. Please go ahead. 21:34 21 minutes, 34 seconds Uh hello sir, good evening everyone. Uh I would like to know that uh you you have shown that UAE sales has been 33 21:42 21 minutes, 42 seconds crores. Is it for the only UAE or we have exported some cylinders to other 21:48 21 minutes, 48 seconds part of uh countries as yeah sorry can you repeat that? Sorry we didn't follow. 21:56 21 minutes, 56 seconds Uh we have seen that UA sales has grown up by 33 crores. US plant. 22:06 22 minutes, 6 seconds Hello. You're talking about quarter sales. 22:08 22 minutes, 8 seconds Yeah. You're talking about quarter sales. Yes. Yes. Yes. 22:12 22 minutes, 12 seconds Is it 33 K is for only supplied to UAE market or it is uh exported to other countries like 22:20 22 minutes, 20 seconds export export export exported to other countries. Yeah. Export. 22:26 22 minutes, 26 seconds Thanks. uh uh what will be the percentage of type three sales and value uh in coming uh this uh financials 22:35 22 minutes, 35 seconds in UAE uh char sorry to interrupt you your voice 22:42 22 minutes, 42 seconds is breaking terribly can you please come in a better reception area please now it is clear sir 22:50 22 minutes, 50 seconds yeah I can hear you yes go ahead you said type three Okay. 22:58 22 minutes, 58 seconds Charget. Sorry again. We are losing. Hello. 23:05 23 minutes, 5 seconds Charget. May I request you to reconnect please? You can go. Thank you. 23:14 23 minutes, 14 seconds Ladies and gentlemen, you may press RN1 to ask a question. 23:30 23 minutes, 30 seconds A reminder to all the participants, you may press star N1 to ask a question. 23:46 23 minutes, 46 seconds Next followup question is from man of char individual investor. Please go ahead. 23:52 23 minutes, 52 seconds Yeah, good evening. Uh I hope now my voice is pretty clear. Yes. Yes. Yes. Yes. 23:58 23 minutes, 58 seconds Thank you so much. Thank you. I would like to know uh the type three sales and percentage value in uh overall years in India. 24:06 24 minutes, 6 seconds India is you know not so significant you know. Uh yeah it's quite small. 24:14 24 minutes, 14 seconds Okay fine great. Uh there is uh 24:25 24 minutes, 25 seconds Tajet, can you hear us? Can you hear us? 24:39 24 minutes, 39 seconds There's no response from the participant. Yes, Sah, can you hear us? 24:50 24 minutes, 50 seconds A reminder to all the participants, you may press star and one to ask a question. 25:04 25 minutes, 4 seconds As there are no further questions, I'll now hand the conference over to the management for closing comments. 25:11 25 minutes, 11 seconds Yeah. Um, thank you once again for your interest and support. Should you need any further clarification or would like 25:18 25 minutes, 18 seconds to know more about the company, please feel free to contact our investor relation team or CDI India. Thank you. 25:27 25 minutes, 27 seconds Thank you very much. On behalf of Everest Contour Cinderella Limited, that concludes this conference. Thank you for joining us and you may now disconnect the lights.