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    Everest Kanto

    EKC
    Capital Goods·18 Nov 2025
    Management Summary

    Everest Kanto Cylinder Limited reported a steady Q2 FY26 with consolidated revenue of ₹360.4 crores and PAT of ₹13.7 crores. The company is making significant progress on its new facilities in Mundra and Egypt, with commercialization expected by March and January respectively. While the CNG segment faced short-term softness and US margins were impacted by higher costs, management expressed confidence in future growth driven by strong order book visibility, clean energy, and industrial applications. A one-time penalty of ₹11 crores was incurred for non-compliance with SEZ foreign exchange earnings.

    Highlights

    5
    • Consolidated revenue of ₹360.4 crores and PAT of ₹13.7 crores indicate steady performance.

    • Standalone EBITDA margin improved to 11.2% compared to 9.3% in the same period last year.

    • Significant progress on new facilities in Mundra (₹130 crores spent) and Egypt (₹86 crores spent), which will enhance manufacturing capabilities.

    • Strong order book visibility, with the US business having an $80 million order book and overall order book of approximately ₹1,000 crores.

    • Growing opportunities in clean energy (hydrogen) and industrial applications, with defence sector also showing growth.

    Concerns

    5
    • Consolidated EBITDA margin of 11.9% is lower than the guided range of 12-14%.

    • Short-term softness in CNG segment volumes in India due to GST transition in the end-user automotive industry.

    • US margins were affected by higher operating costs during the quarter.

    • A one-time penalty of ₹11 crores was paid for not completing net foreign exchange earnings in the SEZ plant.

    • Employee costs rose from ₹36 crores to ₹43 crores YoY due to expansion and increments.

    What Changed1

    vs Q3 FY26

    Guidance items9 → 5 (-4)

    Key financials

    Single quarter

    07 metrics
    1. 01Consolidated Revenue₹360.4 Cr
    2. 02Consolidated EBITDA₹42.9 Cr
    3. 03Consolidated EBITDA Margin11.9%
    4. 04Consolidated PAT₹13.7 Cr
    5. 05Standalone Revenue₹232.4 Cr

    Order Book

    high confidence

    Total Value

    ₹ 1,000 crores

    as of 2025-09-30

    range

    Execution

    executable over the next 1 year

    Composition

    USA(geography)
    USD 80 million

    "The company has good visibility in its order pipeline, supporting future growth."

    Source:
    Q&A

    Capital allocation

    2
    medium confidence
    CategoryHeadline
    Capex

    Capex disclosed

    Liquidity

    Liquidity disclosed

    Adequate limits for working capital requirements.

    Guidance & targets

    5
    CategoryTargetPriority
    Margin
    EBITDA Margin
    12% to 14%
    High
    Revenue
    Standalone Revenue
    ₹900 crores to ₹1,000 crores
    High
    Capacity
    Egypt Plant Commercialization
    January 2026
    High
    Capacity
    Mundra Plant Commercialization
    March 2026
    High
    Outlook
    Overall Growth Outlook
    Positive
    High

    Egypt Plant Commercialization

    next quarter (by January)
    CurrentPreparing for trial production
    TargetCommercial operations commenced

    Why it matters

    Successful commercialization of the Egypt plant is key to expanding manufacturing capabilities and serving international opportunities.

    Egypt will be happening very soon, maybe by January.

    How to verify

    guidance_and_targets[metric='Egypt Plant Commercialization']

    Risks & concerns

    3
    RiskSeverity

    GST case outcome

    Ongoing GST case with representations made to government; management is hopeful for a positive outcome, but it affects the entire industry.Both acknowledged

    medium

    Recurrence of penalty for not meeting SEZ foreign exchange earnings

    A ₹11 crore penalty was paid for past non-compliance; recurrence is possible if SEZ rules are not amended or exports do not increase.Both acknowledged

    medium

    Margin pressure due to product mix and operating costs

    Margins were impacted by a less favorable product mix (drop in high-value products) and higher operating costs in the US, though management expects improvement.Management acknowledged

    medium

    Q&A highlights

    7

    “Hydrogen development in India has already started. Government is giving a lot of push on hydrogen... it will be coming as a mobility fuel in the future. But this future will take time because the entire ecosystem needs to be set up... But it is looking good, and hydrogen will be complementary to us. The faster it comes better because, again, hydrogen storage is at very high pressure and cylinders are required there.”

    Clarifies the company's long-term view on hydrogen, its complementary nature to their core business, and the timeline for its impact, while reaffirming CNG as a current growth driver.

    asked by Ashit R. Kothi

    2 min read6 chapters

    Detailed Narrative

    01

    Q2 FY26 Performance Overview

    Everest Kanto Cylinder Limited reported a steady performance in Q2 FY26. Consolidated revenue reached ₹360.4 crores, with an EBITDA of ₹42.9 crores, resulting in an EBITDA margin of 11.9%. The company posted a PAT of ₹13.7 crores for the quarter. On a standalone basis, revenue was ₹232.4 crores, and the margin improved to 11.2% compared to 9.3% in the same period last year.

    02

    Domestic and International Operations Update

    The domestic CNG segment experienced short-term softness due to GST transition in the automotive industry, which has since normalized. The Industrial segment performed as expected. In international operations, the US business saw lower dispatches but healthy first-half performance, though margins were impacted by higher operating costs. The Middle East operations showed early signs of improvement, with the UAE order book slowly improving and expectations for better margins once the order book strengthens.

    03

    Capacity Expansion Progress

    The company is making steady progress on its new facilities in Mundra and Egypt. Approximately ₹130 crores has been spent on the Mundra plant, with a balance of ₹30 crores remaining. For the Egypt plant, ₹86 crores has been spent, with ₹40 crores remaining. The Egypt plant is expected to begin trial production and commercialization by January 2026, while the Mundra plant is targeted for commercialization by March 2026. These expansions are set to significantly enhance manufacturing capabilities.

    04

    Strategic Growth Drivers and Outlook

    Management highlighted CNG and Industrial segments as primary growth drivers, with new applications emerging in industrial gases, defence, solar, and semiconductor sectors. Hydrogen development in India is seen as a complementary long-term opportunity, as high-pressure cylinders will be required for its storage and mobility. The company maintains a positive outlook for the next two years, driven by growing opportunities and a strong order pipeline.

    05

    Regulatory and Operational Challenges

    An ongoing GST case, affecting the entire industry, is being pursued with representations to the government and a High Court case, with management hopeful for a positive outcome. The company also incurred a one-time📎 penalty of ₹11 crores for not meeting net foreign exchange earnings requirements for its SEZ plant over a five-year assessment period. While this was a one-time📎 payment, management is seeking amendments to SEZ rules to prevent future recurrences.

    06

    Order Book and Margin Commentary

    The US subsidiary has an order book of $80 million, executable over 12-18 months. The total order book across all locations is approximately ₹1,000 crores, executable over the next year. The consolidated EBITDA margin for the quarter was 11.9%, below the guided range of 12-14%. This was attributed to a product mix shift, specifically a drop in high-value products, and higher operating costs in the US. Management expects margins to improve as CNG volumes pick up and the product mix normalizes.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.